Annual Report 2013
Year ended March 31, 2013

Business Domains of the Furukawa Company Group
Since its establishment in 1875, Furukawa has emerged from its origins in mine development to build a broad range of businesses
while constantly addressing the needs of the times. In our businesses, which can be broadly classified into the fields of machineryand materials, we deliver attractive products to diverse markets. Going forward, we will expand our involvement in rapidly growing
businesses, while adhering to our basis corporate policies, which are to “strengthen the technical capabilities of the Machinery business and promote further overseas development” and “promote development activities aimed at new product commercialization.”

Furukawa’s Technological Genealogy
Mining technologies

Exploitation technologies

Drilling technologies

Transport / Mineral processing technologies

Slurry transportation
technologies

Hydraulic control technologies

Grinding
technologies

MachineryBusiness

CONSTRUCTION AND
MINING MACHINERY (ROCK DRILLS)UNIC MACHINERY

INDUSTRIAL MACHINERY

Hydraulic breakers

UNIC cranes

Slurry pumps, sludge pumps

Hydraulic crushers

UNIC carriers

Progressing cavity pumps

Crawler drills

Mini crawler cranes

Tunnel drill jumbos

Ocean cranes

Environmental machinery(Electrostatic precipitators)
Crushers, grinding mills,
briquetting machines
Steel structures

Construction and Mining Machinery (Rock Drills) / UNIC Machinery
Industrial Machinery

Mines (iron ore, copper, coal, lime, etc.)
Quarries

Resource development

Engineering and construction sites
Tunnel construction
Bridges, Pedestrian bridges
Sewage treatment plants
Logistics
Vehicle transportation

Steel plants
Refineries
Shipyards
Various plants
Incinerators

Infrastructure, engineering, construction

B

U

Heavy industry

S

I

N

E

S

S

Smelting technologies

Exhaust gas
treatment
technologies

Flash smelting
technologies

Sulfuric acid production
technologies

Electric technologies

CHEMICALSELECTRONIC MATERIALS

Materials
Business

METALSElectrolytic
copperCuprous oxide
Cupric oxide

High-purity metallic
arsenic

Sulfuric acid

Other crystal products
Coils

MetalsChemicalsElectronic Materials

Paper manufacturing plant
Chemicals factory
Paints factory
Copper plating plant

Semiconductor devices
Electronic goods
Communications equipment (mobile phones, etc.)
PCs
LEDs
Digital home appliances (TVs, DVD players, etc.)
White goods (air conditioners, refrigerators, etc.)

Chemicals industry

D

O

M

A

I

N

Electronics, IT, semiconductor industries

S

Green car
Solar power generation
Smart community
Next-generation medical
examination equipment
Radiation meters

Next-generation new industry
Annual Report 20131

To Our Stakeholders

Business Conditions and Performance
In fiscal 2013, ended March 31, 2013, the Japanese economy
showed signs of a moderate turnaround on the back of disasterrecovery demand following the Great East Japan Earthquake. Afterthe change in government at the end of calendar 2012, moreover,
expectations about economic recovery increased as the government and the Bank of Japan embraced policies aimed at breaking
the deflationary cycle, which caused the yen to weaken and stock
prices to rise. However, economic instability overseas underscoredthe risk of downward pressure on the domestic economy.
Facing these conditions, the Furukawa Company Group imple-

million, due to a foreign exchange gain stemming from the weakened yen. Furthermore, there was a ¥994 million gain on sales ofinvestment securities, ¥1,264 million in compensation income, andan ¥824 million gain on sales of subsidiaries’ stocks accompanying
the divestiture of businesses. In other expenses, the Group posteda ¥1,259 million interest expense, a ¥63 million loss on sales andretirement of noncurrent assets, and a ¥331 million impairment
loss. As a result, net income for the fiscal year totaled ¥2,976 million, compared with a net loss of ¥1,659 million in the previous
fiscal year—representing a substantial year-on-year improvementin earnings.

mented a number of proactive business strategies, centering on its
three machinery-based business segments: Industrial Machinery,

Selection and Concentration

Construction and Mining Machinery (Rock Drills), and UNIC Ma-

In the year under review, the Group sold all of its shareholdings inchinery. These measures included advancing our overseas opera-

Tohpe Corporation, a subsidiary handling its paints business, to Zeontions, addressing disaster recovery demand in Japan, reducing

Corporation. We also sold all of our shareholdings in Furukawa Com-

costs, and enhancing business efficiency. As a result, we generated

merce Co., Ltd., responsible for the fuels business, to Usami Koyu

healthy year-on-year sales increases mainly in the UNIC Machinery

Corp. Withdrawing from the paints and fuels businesses has enabledand Metals segments, but posted revenue declines in other seg-

us to focus our management resources on our core businesses—ma-

ments following the divestiture of businesses, including fuels. For

chinery and materials—creating a framework conducive to selection

the fiscal year, consolidated net sales amounted to ¥165,540 mil-and concentration.

lion, up 5.1% from the previous fiscal year.

In our Machinery business segments—Industrial Machinery, Con-On the earnings side, although the Construction and Mining

struction and Mining Machinery (Rock Drills), and UNIC Machinery—

Machinery (Rock Drills) segment posted a decline in income due

we will steadily pursue disaster recovery demand in Japan. At theto depressed market conditions overseas, the UNIC Machinerysame time, we will reinforce our technical capabilities and step up

segment enjoyed a substantial jump in income owing to healthy

overseas business advancement in order to address changing demandsales in Japan. Accordingly, operating income climbed 56.1%, toin resource-rich countries and emerging nations. We have identified¥3,363 million. Turning to other income, the Group posted ¥966

several markets earmarked for future growth, such as domestic and2overseas infrastructure and resource development, and expanding our
Net Sales

share of those markets is a key strategy.

Operating I(Billions of yen)In the Materials business, the other core business for the Group,(Billions of

we will focus on developing new materials, especially in the Electronic
Materials segment, in order to achieve commercialization at an early

165.6

161.9

stage. In the Metals segment, we will continue emphasizing stable ore

157.6

165.5

142.9

2.8

procurement while examining investments in mines aimed at securing
strategic interests, with the aim of building a framework to comple-

2.3

ment our smelting business.

1.6

By concentrating management resources in the Machinery andMaterials businesses even more rigorously than before, we will strive
to further raise profitability and corporate value.
Dividend Policy'09/3 '10/3 '11/3 '12/3 '13/3

Furukawa places great importance on improving returns of profits to

Machinery Businessall shareholders while retaining earnings required to finance capital

Others Business'09/3 '10/3 '11/3

Materials Business

expenditures and research and development expenses necessary tobolster earnings. Our basic policy is to appropriate profits after comprehensive consideration of future business development and various
other factors.

Net Sales
In fiscal 2013, the Company declared a year-end cash dividendof(Billions of yen)

¥2.00 per share, its first dividend payment in four years. In fiscal 2014,

Operating Income

Net Ass(Billions of yen)(Billions of

we plan to pay a year-end dividend of ¥2.00 per share, with no interim dividend scheduled.

165.6

161.9

157.6

50.9

165.5

3.4

142.9

45.7

47.6

2.8

The Furukawa Company Group is committed to further strengthening
2.3

and upgrading its operational foundation while achieving businessgrowth and enhancing corporate value. To this end, Nobuyoshi Soma

2.2
1.6

assumed the post of chairman and representative director, and Naohisa Miyakawa was appointed president and representative director.
With the new management team in place, we will continue pursuing
our business operations with strategic priority on our two fundamental policies, which are to “promote further overseas'09/3
development
and '12/3 '13/3'10/3 '11/3
strengthen the technical capabilities of the Machinery
business”
andMachinery Business
Materials Business'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3“promote development activities aimed at new product
Others commercialBusinessization.” We look forward to the understanding and support of all
stakeholders as we embrace the challenges of the future.
Net Sales

Operating Income

Net Assets(Billions of yen)(Billions of yen)(Billions of yen)

165.6

161.9

August 2013

157.6

50.9

165.5

3.4

142.9

45.7

47.6

47.7

51.5

2.8
2.3
Nobuyoshi Soma 2.2

Chairman and Representative Director
1.6'09/3 '10/3 '11/3 '12/3 '13/3
Machinery Business
Others Business

Naohisa
Miyakawa'09/3 '10/3'11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

President and Representative Director
Materials BusinessAnnual Report 20133

An Interview with the President— The Furukawa Company Group’s
Future Business Strategies —In today’s challenging business environment, the Group is targeting
renewed growth by focusing on the expanding Machinery and Materials
business domains.

Question 1
How did the Furukawa Company Group perform in fiscal 2013?
For the year, we posted improvements in revenue and earnings and returned net income tothe black. The UNIC Machinery segment, in particular, was a driving force for Groupwide
income, posting strong results on the back of reconstruction demand, as well as government subsidies and reduced taxes for energy-efficient vehicles. By contrast, the Construction
and Mining Machinery (Rock Drills) segment experienced a slump in business in Asia due tothe economic slowdown in China, despite a healthy performance in Japan. Also, the Electronic Materials segment suffered from persistent concerns related to the Fukushima nuclear
power plant accident and ongoing stagnation in the semiconductor industry. Both segments
remained in the red as a result.
Overall, however, it was a year of progress, in which we sold off our paints and fuels businesses and built a framework allowing us to focus more attention on our core businesses
in machinery and materials. I believe fiscal 2013 was a turning point that will lead us to abright future.

Question 2
What is your outlook for the future?
In the current fiscal year, we will continue pursuing our basic corporate policies, which are“promote further overseas development and strengthen the technical capabilities of theMachinery business” and “promote development activities aimed at new product commercialization.” For the time being, we will endeavor to build up a steady track record, with the
Machinery business serving as the motive force as it did in fiscal 2013. In addition to promoting overseas development, meanwhile, we will step up our responses to demand in thedomestic reconstruction business.
Within the Machinery business, we expect the Industrial Machinery segment to post yearon-year increases in revenue and earnings due to reconstruction demand. We also projecthigher sales and income in the Construction and Mining Machinery (Rock Drills) segment,
buoyed by firm domestic demand for reconstruction-related infrastructure, as well as improved overseas competitiveness thanks to the weakening yen. Having withdrawn from thepaints and fuels businesses, we expect Groupwide sales to decline, but we look forward to
an increase in operating income.

Question 3
What is your outlook for the reconstruction business, and how will you
deploy the Group’s strengths in response?
4

Focus on Machinery Business andMaterials Business

MachineryBusiness
Industrial
Machinery

Materials
Business
MetalsRock Drills

Electronic
Materials

UNIC

Chemicals

Basic corporate policies• Strengthen the technical capabilitiesof the Machinery Business and promotefurther overseas development• Promote development activities aimed
at new product commercialization

Rock-crushing and conveying system planned for
introduction in the disaster-stricken areas to facilitate
relocation to higher ground. This represents a
combination of the Group’s distinctive technologies insuch products as feeders, screens, crushers, and belt
conveyors.

The national budget for restoration and reconstruction is a huge ¥25 trillion, and is being allocated over a five-year period starting in fiscal 2012. In the current fiscal year, we are finallysensing that the reconstruction business is gathering full momentum. This business entails
a multifaceted plan covering such aspects as relocating to higher ground and other restoration areas, as well as roads, bridges, tunnels, and ports.
With a suite of products in Japan related to such infrastructural equipment, the Furukawa
Company Group has a history of providing behind-the-scenes support for the nation’s social
foundation since the Group’s beginning. Our products, featuring distinctive technologies,
have earned high market shares and are expected to be broadly adopted in the reconstruction field—a testament to our accumulated history, technologies, and comprehensive
strengths.

Question 4
Can you provide specific examples of recent successes in this field?
With respect to relocating to higher ground, we have already accepted orders for rockcrushing equipment and conveyors for moving earth and sand, and in response we are
manufacturing rock crushers and belt conveyors at a rapid pace. Moreover, our tunnel drill
jumbos are currently in operation at tunnel construction sites for reconstruction roads andsupport roads. With numerous tunnel projects planned for the future, we anticipate widespread adoption of our products as the nation’s sole manufacturer. In addition, productionof cement and gravel—crucial elements of civil and construction projects—is running atfull capacity, and we expect our hydraulic crawler drills and rock crushers to be in demandat lime mines and quarries for a long time to come, with the added bonus of replacement
demand and demand for parts. In addition, we expect more and more of our UNIC cranes,
used for transporting and unloading construction materials, to be in operation as the reconstruction business marches forward.
As can be seen, our products are designed for distinctive markets. However, we believe
we have the flexibility to address the diversified needs of the reconstruction business.

Our tunnel drill jumbo is expected to play amajor role in reconstruction-related projects andconstruction of the Chuo Shinkansen (linear
motor car).

We also look forward to bridge projects as partof reconstruction-related work and the Building
National Resilience Plan.

Question 5
Can you describe some of the Group’s medium-term initiatives?
We believe that domestic reconstruction demand will firm up over the next few years, andwe will strive to translate such demand into concrete results. In addition, we feel we cancontribute to public works projects in various ways, including through the Building National
Resilience Plan and renewal of aging infrastructure. Looking further ahead, construction isscheduled for the Chuo Shinkansen (linear motor car) and extensions to current Shinkansen

Our UNIC cranes are used totransport and unload construction
materials.

Annual Report 20135

lines. Accordingly, we believe that our domestic Machinery business will enjoy healthy market conditions for some time.

Question 6
What are the Group’s overseas strategies?
At present, mine development and infrastructure projects in emerging nations and resourcerich countries are tending to stagnate, but we anticipate recovery. In response, we will work
actively to upgrade our sales facilities, attract more customers, and otherwise develop oursales capabilities so that we can immediately address demand when it recovers. Anotherimportant priority for the Group’s future growth is to advance the Construction and Mining
Machinery (Rock Drills) segment and UNIC segment overseas. To this end, we will strive todevelop and launch new products matched to the requirements of various users in various
regions.
In the Construction and Mining Machinery (Rock Drills) segment, which has a high ratioof overseas sales, we will work to increase sales of hydraulic crawler drills for medium-sized
mines in Southeast Asia, South Africa, and the Middle East, as well as cement companies
and general contractors. We will also focus on hydraulic breakers and mine-use jumbos. In
the UNIC segment, we will target progress in UNIC cranes for the Southeast Asian and Russian markets, and will step up sales in various regions of our mini crawler cranes, which are
self-propelled and can operate in confined spaces, while exploring uses for those machines
in Europe as well.

Furukawa’s mini crawler
cranes played a major rolein the glass-fitting phase of
construction of The Shard,
Europe’s tallest building, inLondon.
These machines are highly
acclaimed for theircompactness and exceptional ease of operation.

Question 7
Can you describe the Group’s initiatives in the Materials business?
In the Materials business, another cornerstone of our operations, we will work to develop
and commercialize new materials that will become another pillar supporting the Group. We
are already fostering coil products as a pillar of the Electronic Materials segment, and anticipate increased demand for electronic control technologies for automobiles—spearheadedby plug-in hybrid, electric, and fuel-efficient vehicles. We look forward to dramatic progressin this field. In addition, we will continue promoting development and commercialization of
new applications for gallium nitride (GaN) substrates and thermoelectric conversion materials, as well as lutetium aluminum garnet (LuAG) and gadolinium aluminum gallium garnet(GAGG) scintillator crystals.

Question 8
Having been appointed the new president, please describe your futureaspirations and give a final message for stakeholders.
I was officially appointed president and representative director at the Board of Directors’
meeting held following the close of the Annual General Meeting of Shareholders on June27, 2013. Going forward, I plan to work alongside Nobuyoshi Soma, who became chairman
and representative director. Together, we will strive to further develop and improve the corporate value of the Furukawa Company Group while adhering to our corporate philosophy
and basic strategies—aimed at “achieving full-fledged monozukuri (product creation) and
full-scale structural development”—pursued since before Mr. Soma’s tenure as president.
In the process, we will flexibly reassess our directional path as necessary while formulating
business plans from new perspectives and implementing reforms of existing protocols. I
would like to take this opportunity to thank our stakeholders for their constant and overwhelming support and encouragement. I look forward to your ongoing understanding andsupport in the future.

6

Our coil products are expected to generate growing
demand for use in eco cars, such as plug-in hybrid
vehicles and electric vehicles. These products are
becoming a new pillar supporting the Electronic
Materials segment.

Others

Materials

Machinery

Review of Operations

Industrial Machinery

UNIC Machinery

Furukawa Industrial Machinery Systems Co., Ltd.

Furukawa UNIC Corporation

Pumps, environmental machinery, crushers,

UNIC cranes, mini crawler cranes,

plants, steel structures, castings

UNICPAL, UNIC carriers% of Net Sales

Construction and Mining Machinery(Rock Drills)

34.3%

Furukawa Rock Drill Co., Ltd.
Rock drills (hydraulic breakers, hydrauliccrawler drills, tunnel drill jumbos, etc.)

MetalsChemicals

Furukawa Metals & Resources Co., Ltd.

Furukawa Chemicals Co., Ltd.

Electrolytic copper, gold,

Cuprous oxide, sulfuric acid,silver, sulfuric acidaluminum sulfate,titanium dioxide,

Electronic Materials

ferric polysulfate solution,

Furukawa Denshi Co., Ltd.

cupric oxide% of Net Sales

53.2%

High-purity metallic arsenic, gallium
phosphide polycrystals, X-ray scintillator crystals,
aluminum nitride ceramics, coils, lenses

Paints *Fuels **

Tohpe Corporation

Furukawa Commerce Co., Ltd.

Kinds of paints, acrylic rubber, glue

Heavy oil, gasoline, diesel, kerosene,
lubricating oil, LPG, coke

Real Estate
Furukawa Co., Ltd.

OthersConstruction / sales, mediation / brokerage,

Transportation service byother related services for office buildings

trucks and domestic shipping% of Net Sales

12.5%* On March 27, 2013, the Company sold all of its shares in Tohpe Corporation.
** On October 1, 2012, the Company sold all of its shares in Furukawa Commerce Co., Ltd.

Annual Report 2013

7

Review of Operations● Industrial Machinery

Machinery

Performance and Strategies
In fiscal 2013, the Industrial Machinery segment generated a yearon-year increase in bridge-related sales amid growth in public
sector demand. However, sales of pumps and general industrial
machinery declined due to languishing demand in the private sector. As a result, the segment posted sales of ¥12,895 million, down
0.4% from the previous fiscal year. Operating income rose 10.0%,
to ¥779 million.
Going forward, in the public sector we will step up sales activities related to disaster recovery projects. Meanwhile, we are making steady progress in our earth-moving business, having alreadyreceived orders for rock-crushing equipment, conveyors, and thelike. In addition, we will focus on bridge-related projects and products associated with remodeling projects and infrastructural facilities in response to the central government’s plan to strengthen thenation and lengthen the life of its infrastructure.
In the private sector, we will step up sales of sector-specific solutions and sales of section plants. We will also target growth insales to the cement and rock-crushing industries, which have beenenergized by disaster recovery demand and economic growth.
Overseas, we will promote business advancement while reinforcing alliances with Japanese companies, engineering firms, and water treatment equipment manufacturers.

Construction and
Mining Machinery(Rock Drills)
Hydraulic crawler drills

Our sludge pumps have a proud trackrecord in sewage treatment plants.

Global Market
Share
Japanese Market
Share

30％

Our rock crushers are expected toplay a role in facilitating relocation
to higher ground.

65%

Hydraulic breakers

Tunnel drill jumbos

Japanese Market
Share

Japanese Market
Share

40%

With growing reconstruction-related
demand, aging facilities and the needto build new infrastructure, we expect
demand for bridge construction to increasein the future.

Industrial Machinery

90%

Net Sales

Operating Income (Loss)(Billions of yen)(Billions of yen)

15.8

UNIC Machinery
Truck-mounted cranes(UNIC cranes)

Vehicle carriers(UNIC carriers)

Japanese Market
Share

Japanese Market
Share

50%

0.8
12.9

12.8

0.8

12.9

10.7

0.4

(0.0)

50%

'09/3 '10/3 '11/3 '12/3 '13/3
8

0.7'09/3 '10/3 '11/3 '12/3 '13/3

Machinery● Construction and Mining Machinery (Rock Drills)● UNIC Machinery

Performance and Strategies
In the domestic rock drills business, revenue increased significantly
on the back of solid performances by hydraulic breakers, hydraulic crushers, and hydraulic crawlers, buoyed by disaster recovery
demand and the fast-tracking of public works projects. Overseas,
we enjoyed sales growth in Europe, North and South America, andAfrica, but sales in Asia declined considerably, impacted by the
economic slowdown in China. As a result, the Construction and
Mining Machinery (Rock Drills) segment posted a 3.5% decreasein sales, to ¥23,306 million, and an operating loss of ¥68million,
compared with operating income of ¥334 million in the previous
fiscal year.
In Japan, we will step up sales of tunnel drill jumbos targeting
disaster-related service roads and tunnel projects. At the sametime, we will upgrade our equipment and service systems in orderto generate solid revenue.
Overseas, we will continue working to boost sales related tomine development in Southeast Asia, Latin America, and South Africa. In addition, we will strengthen our service capabilities in orderto maintain existing customers and thus boost revenue.

Performance and Strategies
In fiscal 2013, domestic truck registrations remained at high levels,
growing 15% year on year on the back of disaster recovery demand and subsidies and reduced taxes for energy-efficient vehicles.
Accordingly, sales of UNIC cranes increased significantly, driven
mainly by demand in eastern Japan and the rental industry. We
also tapped new demand for mini crawler cranes, thus generating
increased revenue, and our shipbuilding cranes and vehicle carriers(UNIC carriers) also performed well. As a result, sales in the UNIC
Machinery segment climbed 28.2% year on year, to ¥20,651 million, and operating income jumped 138.5%, to ¥2,213 million.
Going forward, we will continue pursuing sales activities for
our UNIC cranes while monitoring trends related to public works
investments and disaster recovery demand. Here, we will pay particular attention to the wide-area and local rental markets. In addition, we will continue strengthening sales activities for mini crawler
cranes, which do not require regular trucks for transportation, andshipbuilding cranes.
Overseas, we will target sales expansion by launching machinery
tailored to various markets. From the cost perspective, meanwhile,
we will build optimal production systems in Japan, China, andThailand.

Truck-mounted cranes (UNIC cranes)-the U-can ECO seriesof low-noise, fuel-efficient truck-mounted cranes is steadily
penetrating the market.
Our hydraulic crawler drills enjoy a high market
share and are used in mines, quarries, and civilengineering and construction sites, both inJapan and overseas.

Hydraulic breakers, which are attached tohydraulic shovels, are used for excavating rockand breaking concrete.

We have a full lineup of vehicle carriers (UNIC
carriers) featuring truck-mounted cranes, two-vehicle
carriers, and other high-value-added offerings.
Used for tunneling through mountains inroad and railway construction projects inJapan, tunnel drill jumbos dominate thedomestic market.

Our mini crawler cranes, with exceptional functionality
and ease of operation, have been highly praised,especially in Europe.

Construction and Mining Machinery (Rock Drills)

UNIC Machinery

Net Sales

Operating Income (Loss)

Net Sales(Billions of yen)(Billions of yen)(Billions of yen)

29.4

17.4
23.9

24.1

0.3

0.3

(0.4)

11.1

(0.1)

'09/3 '10/3 '11/3 '12/3 '13/3

2.2

12.5

0.9

0.7

（0.2）
（0.9）

(2.6)
'09/3 '10/3 '11/3 '12/3 '13/3(Billions of yen)

16.1

23.3

20.4

Operating Income (Loss)
20.7'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

Annual Report 20139

● Metals
Performance and Strategies
After starting the year at US$8,480.00/ton on April 1, 2012, theprice of electrolytic copper reached a peak of US$8,575.50/ton on
April 3, then slumped for a while due to waning expectations ofadditional quantitative easing in the United States. Subsequently,
the price moved around in line with the financial and debtrelated situations in the United States and Europe before endingat US$7,582.50/ton on March 31, 2013. The domestic market forelectrolytic copper was buoyed by subsidies and reduced taxes onenergy-efficient vehicles in the first half of the year. In the second
half, however, after such beneficial treatments ended, demand
languished in the wake of anti-Japanese purchasing campaigns
in China. Demand for copper wire in the construction sector was
firm, bolstered by redevelopment projects in the Tokyo metropolitan area.
In the previous fiscal year, the Company’s sales of electrolytic
copper declined in volume terms due to reduced production following the Great East Japan Earthquake. In the year under review,
however, volume sales rose 14,191 tons, to 96,789 tons. Accordingly, sales in the Metals segment climbed 14.4%, to ¥77,945 million, and operating income declined 8.1%, to ¥283 million.
Current purchasing conditions of copper concentrates, while in adifficult state, are on a recovery path, and gross profit from refining operations is expected to improve with the added help of theweakening yen. Moreover, overseas mines in which the Company
has mining rights also make a valuable contribution to otherincome. Going forward, we will seek to secure new mining rights,
with the aims of ensuring reliable copper concentrates procurement and stabilizing profits.

Materials● Copper prices and foreign exchange rates

2009/3

2010/3

2011/3

2012/3

2013/3

LME copper price (average; US$ / ton)

5,864

6,101

8,139

8,485

7,855

JPY rate per US$ (average for fiscal year)¥100.54¥92.85¥85.71¥79.07¥83.102009/3

2010/3

2011/3

2012/3

2013/3Copper production volume (tons)

90,02384,45589,52376,896

90,387

Copper sales volume (tons)

88,98989,45689,17682,597

96,789● Copper production and sales volume**Furukawa Metals & Resources Co., Ltd.

MetalsNet Sales

Operating Income(Billions of yen)(Billions of yen)

80.0
68.8
Electrolytic copper

71.1

3.2

77.9
68.1

Hibi Kyodo Smelting Co., Ltd.

1.5

0.3

0.3

0.0
Gibraltar Copper Mine in Canada

10

Onahama Smelting and Refining Co., Ltd.

'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

Materials● Electronic Materials● Chemicals

Performance and Strategies
In the year under review, sales of high-purity metallic arsenic andscintillator crystals—mainstay products in this segment—declined
due to harmful rumors stemming from the Fukushima nuclear
power plant accident, as well as a slump in the semiconductor
market. However, sales of core coils for use in automobiles weresteady. As a result, the Electronic Materials segment posted an
8.1% increase in sales, to ¥4,988 million, and an operating loss of¥263 million, compared with an operating loss of ¥234 million in
the previous fiscal year.
Going forward, our aim is to restore market share for mainstay
high-purity metallic arsenic and scintillator crystals by reducing
costs to meet market price expectations. At the same time, we will
strengthen sales of coil products, which are not affected by conditions in the semiconductor market, and step up sales of aluminum
nitride and optical components. In particular, we plan to grow ourcoil products business into a major pillar supporting the Electronic
Materials segment. To this end, we will focus on all aspects of thatbusiness, including product development, production facilities, andproduct inspections and quality assurance.

Performance and Strategies
Volume sales of sulfuric acid declined in fiscal 2013, impacted bylanguishing domestic demand. Thanks to price adjustments implemented in the previous fiscal year, however, sales in value terms
increased year on year. We also enjoyed growth in sales of cupricoxide for plating as we raised production capacity and attracted
new customers. However, sales of cuprous oxide declined significantly due to depressed demand for paints applied to the bottoms
of ships. As a result, the Chemicals segment reported a 1.8% decrease in sales, to ¥5,094 million, and a 21.1% increase in operating income, to ¥304 million.
Looking ahead, we will continue cultivating new customers andsecuring sales volume for sulfuric acid and its derivative products.
With respect to cuprous oxide and cupric oxide for plating, we will
enhance cost controls through sharing of raw materials in orderto maximize profits from both products. We will focus particularattention on expanding sales of cupric oxide for plating for use insmartphones and tablet terminals, in addition to personal computers (PCs), with the aim of addressing diversified customer needs.

High-purity
metallic arsenic

Cuprous oxide

Japanese Market
Share

Japanese(Production)
Market Share

Global Market
Share

70%

50%

Our core coils are used in power sourcesand electronic control devices.

45%

High-purity metallic arsenic—high-purity
gallium arsenate semiconductor materials
used in mobile phones and otherelectronic devices, red laser diodes, and
LEDs

Sales of cupric oxide for plating haveincreased thanks to completion of a newplant.

Electronic Materials

5.6

Cuprous oxide is used as an antifoulingagent in paints applied to the bottoms ofships.

Chemicals

Net Sales

Operating Income (Loss)

Net Sales

Operating Income(Billions of yen)(Billions of yen)(Billions of yen)(Billions of yen)

7.1

1.3

5.8
5.0

6.0
4.6

5.1

5.2

5.1

0.7

5.0

0.0
(0.2)

'09/3 '10/3 '11/3 '12/3 '13/3(0.3)'09/3 '10/3 '11/3 '12/3 '13/3

0.2'09/3 '10/3 '11/3 '12/3 '13/3

0.3

0.3

0.3

0.1

'09/3 '10/3 '11/3 '12/3 '13/3

Annual Report 2013 11

Other Business

Other Business● Paints
In this segment, we enjoyed healthy sales of highly functional
paints for electronic components, as well as environmentallyfriendly powder coatings and solvent-baked paints. Accordingly,
the Paints segment posted a 1.4% increase in sales, to ¥15,079
million, and operating income of ¥66 million, compared with anoperating loss of ¥329 million in the previous fiscal year.
On March 27, 2013, we sold all of our shares in Tohpe Corporation, which handles the Group’s paints business, in response to atender offer.

Net Sales

Operating Income (Loss)(Billions of yen)(Billions of yen)

15.0 14.9

15.1

0.1
(0.0)

3.7

(0.1)
(0.3)

'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

Net Sales

Operating Income(Billions of yen)(Billions of yen)

● Real Estate
Revenue in the Real Estate segment declined due to rising vacancy
rates among office buildings in the Osaka area. As a result, theReal Estate segment posted a 14.1% decrease in sales, to ¥1,059
million, and a 38.4% fall in operating income, to ¥220 million.
The Nihonbashi-Muromachi Eastern District Redevelopment Project is progressing well, with opening scheduled for spring 2014.

2.4

1.1

2.0
1.6
1.2

0.7

0.6

1.1

0.4
0.2
'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

Net Sales

Operating Loss

(Billions of yen)(Billions of yen)

● Fuels and Others
The Fuels category reported a 60.6% drop in sales, to ¥3,771 million, and an operating loss of ¥28 million, compared with an operating loss of ¥14 million in the previous fiscal year. On October 1,
2012, we sold all of our shares in Furukawa Commerce Co., Ltd.,
which handles the Group’s fuels business. Accordingly, the figures
for sales and operating loss were posted in the first two quarters of
the fiscal year.
In the Others category, consisting primarily of the transportation
business, we reported a 2.0% decrease in sales, to ¥752 million,
and an operating loss of ¥63 million, from an operating loss of ¥94
million in the previous fiscal year.
As a result, sales in the Fuels and Others segment fell 56.3%, to¥4,523 million, and operating loss was ¥91 million, from an operating loss of ¥108 million in the previous fiscal year.

12

16.7

10.7

9.8

10.3
（0.1）
4.5

（0.1）（0.1）（0.1）（0.4）'09/3 '10/3 '11/3 '12/3 '13/3'09/3 '10/3 '11/3 '12/3 '13/3

Research and Development
The Furukawa Company Group’s Research and Development Division consists of seven entities: Nitride Semiconductors Department, Semiconductor Growth System Department, Materials Research Laboratory, Techno-Research Laboratory, R&D Planning
Department, Intellectual Property Department, and Control Department.
The Division plays a key role in supporting initiatives aimed at providing “Technology to Our Future.” As well as engaging inresearch and development activities on new materials and machinery products and on processing equipment in the interdisciplinary field of materials and machinery, the Division supports the product development initiatives of each Group company. The
Research and Development Division is reinforcing initiatives geared toward realizing Furukawa’s guiding principle, which is to“promote development activities aimed at new product commercialization.”■ GaN Substrates (Nitride Semiconductors Department)
The Nitride Semiconductors Department develops and manufactures GaN substrates used in the fabrication of GaN devices, which
are next-generation semiconductor materials that transcend thelimits of silicon semiconductors. Following the successful development of two-inch and four-inch GaN substrates, the Company iscurrently developing non-polar substrates, GaN templates, andother items. We have also been promoting sales of GaN substrates
to manufacturers of laser diodes, light-emitting devices (LEDs), andelectronic devices.

Two-inch GaN substrate andthe recently developed
four-inch GaN substrate■ Thermoelectric Conversion Materials (Materials ResearchLaboratory)
Furukawa is developing thermoelectric conversion materials that
use thermal energy to convert heat into electricity. By applying
unused waste heat to generate electricity, such materials can help
save energy, and the Company has been receiving increasing inquiries as a result. While addressing such inquiries, we will movesteadily towards commercialization.

Thermoelectric conversion
element module■ LuAG and GAGG Scintillator Crystals (Materials ResearchLaboratory)■ High-Temperature Vacuum Heat Treatment Machine(Semiconductor Growth System Department)

Scintillator crystals are crystals that absorb and emit radioactiveenergy. The Company is developing scintillator crystals for medical
diagnostic imaging systems and for radiation detectors that measure radiation levels. A PEM system (next-generation breast cancer
screening system) using LuAG scintillator crystals is currently undergoing clinical trials. The Company used GAGG scintillator crystals
to develop a high-sensitivity radiation detector by applying thesuperior gamma-wave detection properties of these crystals. The
device, called Gamma Spotter, was developed to meet a surge indemand for radiation detectors following the recent nuclear power
plant accident in Japan. We also developed a non-destructive radiation detector specifically for fish.

The Company has developed a heat treatment machine for frit
high-temperature drying, which is part of the fabrication process
for organic electroluminescent (EL) devices. The new machine permits simultaneous drying of numerous large-diameter substrates ina high-vacuum, high-temperature environment. We are confident
that it will generate increased sales going forward.

LuAG scintillator crystals

Second PEM system prototype

GAGG scintillator crystals

Non-destructive radiation detector for fish

High-temperature vacuum heatprocessing device

Annual Report 2013 13

Environmental Protection and Social Contribution Activities
The protection of the environment is one of the most important management issues at the Furukawa Company Group. Our
fundamental policy is that each employee should strive to perform all corporate activities in harmony with the environment,
consider the improvement of the environment, and contribute to the development of a sustainable society. We are aware of theimportant role we play in giving back to the community as a good corporate citizen.

■ Environmental Management
Environmental Management System
The senior decision-making body for environmental protection activities is the Central Committee for Environmental Management,
in which the senior managing directors and managing directors
participate. In addition, we have the Environmental Management
Subcommittee, which makes proposals related to environmental
protection activities and studies policies and guidelines to address
revisions of environment-related regulations.
Furthermore, the Committee of Environmental Protection Supervisors meets every year, bringing together the people who
directly guide and manage environmental and safety initiatives ineach Group company. At these meetings, the Committee aims tofulfill four basic purposes: (1) convey and ensure the enforcementof decisions made by the Environmental Management Committee, (2) help improve the competency of environmental protection supervisors at each Group company, (3) prevent accidents
and disasters through concerted efforts to share information andreflect it in its daily business management, and (4) verify revisions toenvironment-related regulations.
Environment and Safety Audits
The Furukawa Company Group conducts annual “Environment
and Safety Audits.” In fiscal 2013, these audits gave priority to thetheme of preventative measures aimed at maintaining effective
environmental protection, safety, and hygiene. Under a system
introduced in fiscal 2011, meanwhile, each factory and site waschecked for legal compliance with the relevant rules using 100
new workplace audit items, as well as a new environmental safety
checklist and basic checklist covering labor health and safety activities. Going forward, we will target the upgrading of control systems related to environmental safety and labor safety while making
the Group’s internal networks more robust.
The year under review marked the sixth time that the Group
conducted “cross audits,” in which each plant is audited by anenvironmental protection supervisor from another plant. We introduced the cross-auditing system with the objective of improving
the competence of auditors and the level of auditing undertaken
at the Group’s worksites. In fiscal 2012, the success of this system
was apparent in reciprocal learning and reciprocal education on
wide-ranging know-how, as well as in the increase in auditors’knowledge and the expansion of personal networks.
Biodiversity Action Guidelines
The Furukawa Company Group places considerable importance on
biodiversity and in September 2012 formulated its Biodiversity Action Guidelines, a set of specific guidelines aimed at contributing tosustainable social development as outlined in its Basic Environmental Management Principle. The Guidelines state four key priorities:(1) grasp and reduce impact on biodiversity, (2) raise awarenessand understanding, (3) preserve biodiversity, and (4) collect information and communicate.

14■ Environmental Protection Activities
The Furukawa Company Group’s energy-saving activities center onachieving medium-term targets for energy and resource consumption that are set every five years. The results for the first set of targets (covering fiscal 2005–2009) and the targets for the next five
years (fiscal 2010–fiscal 2014) are shown below.
Second Medium-Term Reduction Targets (Base year: Fiscal 2006)
Category

Fiscal 2014 (target)

CO2 emissions*

5% reduction of fiscal 2006 consumption

Water

5% reduction of fiscal 2006 consumption

Waste discharge

10% reduction of fiscal 2006 consumption* Forms of electricity used: Gasoline, kerosene, diesel oil, heavy oil, LPG, city gas, and electricity■ Social Contribution Activities
The Furukawa Company Group seeks to live in harmony with local communities through stewardship and maintenance of forests
owned by Furukawa and involvement in afforestation programs.
We also participate in factory neighborhood cleanup activities andpreservation of the “Nikko-Suginamiki” (“Avenue of cedars in Nikko”), as well as accept internships and host factory visits. Other activities include fund-raising activities, arranging blood-donor drives,
sponsorship of community events, helping preserve biodiversity,
holding original environmental activities, and loaning our land forfree to local environmental associations.
Fourth Ashio Cherry Tree-Planting Drive
In March 2009, the newly formed Ashio Cherry Blossom Planting
Group got together to begin planting 1,000 cherry blossom seedlings on land owned by Furukawa in Ashio-machi in Tochigi Prefecture. The tree-planting activity has been held annually since then,except in 2011 when the event was cancelled due to the Great
East Japan Earthquake. In March 2013, 57 Group members—madeup of Furukawa employees and their families—took part in the
Fourth Ashio Cherry Tree-Planting Drive.

Corporate GovernanceThe basic policy of the Furukawa Company Group is to contribute to society, our shareholders, and other stakeholders by building an efficient management structure that will yield stable profits and increased corporate value through greater managementtransparency and continuous innovation in our corporate structure. This policy binds the Group’s businesses together to ensure
Group integrity, while enabling them to manage their individual operations under a flexible management structure with aclear focus on asset management and accountability for gain and loss. At the same time, Group businesses leverage collective
strengths to maximize corporate value by providing products and services that achieve customer satisfaction.
■ System of Corporate GovernanceFurukawa maintains a Board of Directors comprising eight members, one of whom is appointed from outside the Group. The
Board of Directors oversees the execution of the Furukawa Company Group’s operations and in principle meets once every month,with additional meetings held as required.
To clearly separate management oversight functions from executive functions, accelerate decision-making, and clarify responsibilities, Furukawa has adopted an executive officer system. At present,
we have 14 executive officers, five of whom concurrently holdpositions as directors.
The Management Council sets the Furukawa Company Group’s
fundamental management policies and strategies and makes decisions on important matters.
There is also a Management Committee, which meets monthly
to discuss the operations of Furukawa and its core companies, andprovides direction. Decisions made by the Management Council
that involve the allocation of funds or other important management issues must be discussed and approved by a resolution of theBoard of Directors. Furthermore, important matters that have been
determined by individual Group companies are discussed and reviewed by the Board of Directors and other relevant bodies.
Furukawa uses an auditor system, with an Audit & Supervisory
Board composed of two statutory auditors and three outside auditors. Pursuant to an audit policy formulated by the Audit & Supervisory Board, auditors attend meetings of the Board of Directors,
the Management Council, the Management Committee, and otherimportant management meetings. In addition, they receive
business reports from directors, audit business sites and subsidiaries,
and monitor the performance of duties carried out by directors. The
audit function is further reinforced by the Audit Office, the organization in charge of internal auditing. The Audit Office is composedof five members who engage in auditing Groupwide operations
management and the execution of business operations. In orderto ensure the efficiency and effectiveness of the audit function,
Furukawa continuously works to reinforce cooperation between the
Audit Office, auditors, and independent auditors, who together devise audit plans, review audit results, and share other audit-related
information.
■ Compliance and System of Risk Management
The Furukawa Company Group has formulated a Corporate Conduct Charter and an Employees’ Code of Behavior. Every effort ismade to ensure that all members of the Group are fully aware ofand practice the principles contained in each.
Furukawa also recognizes effective risk management as animportant aspect of its business activities. In addition to identifying and assessing potential risk and formulating preventive andresponse measures as well as remedial initiatives, the Group has
established the Risk Management & Compliance Committee forthe purpose of formulating the Group’s basic policies toward risk
management and compliance. Through these means, Furukawa iscommitted to developing a comprehensive structure capable of addressing all relevant issues.

Corporate Governance and Internal Control Systems

As of June 27, 2013

Annual General Meeting of Shareholders
Appoints / recalls

Appoints / recalls
Reports

Independent Auditors

Exchanges opinions /information

AuditsBoard of Directors

Reports

8 members(7 internal, 1 outside)

Reports

Representative Director
Reports

Directs

Reports

Reports

Management
Council

Oversees

Management
Committee

Audit & Supervisory Board
5 members(2 statutory, 3 outside)

Reports

AuditsReports

Appoints / recalls

AuditsDirects

Executive Officers(14 members)

AuditsInternal Control Division
Audit Office

AuditsRisk Management &Compliance Committee

Business execution

Accounting Dept.,
othersAuditsAuditsReports

All Divisions and Group Companies
Annual Report 2013 15

Consolidated Six-Year Financial Summary
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31
Millions of yen

2013/3For the year:
Net sales¥ 165,540
Cost of sales
144,225
Gross profit
21,315
Selling, general and administrative expenses
17,952
Operating income
3,363
Income (loss) before income taxes and minority interests
5,433
Net income (loss)
2,976

2012/3

2011/3

2010/3

2009/3

2008/3¥ 157,566 ¥ 165,638 ¥ 142,925 ¥ 161,858 ¥ 213,426
138,097
146,364
127,302
143,651
181,522
19,46919,274
15,623
18,20731,904
17,314
16,453
14,025
15,904
17,497
2,155
2,821
1,598
2,303
14,407(2,663)447
886(2,618)12,484(1,659)563
585(5,917)
8,595

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

5,491(2,253)252

4,978(3,153)(3,782)

3,743(1,644)(5,703)9,083(3,643)(4,769)5,112(11,539)
12,116

12,823(855)(13,835)

Capital expenditures
Depreciation and amortization
Research and development expenses
At year-end:
Total assets
Current assets
Current liabilities
Total equity
Net assets
Interest-bearing liabilities
Per share amounts:
Net income (loss)
Cash dividends
Net assets
Profitability:
Cost of sales margin (%)
Gross margin (%)
SG&A expense margin (%)
Operating margin (%)
Return on sales (%)
Efficiency and soundness:
Return on equity (%) (Note 1)
Return on assets (%) (Note 2)
Debt-to-equity (D/E) ratio (times) (Note 3)
Equity ratio (%) (Note 4)
Investment indicators:
Dividend payout ratio (%) (Note 5)
Dividends on equity (DOE) ratio (%) (Note 6)
Price book value ratio (PBR) (times) (Note 7)
Stock price at fiscal year-end

2,926
3,015
2,559

3,588
3,329
2,622

2,112
3,290
2,225

2,545
3,244
1,862

17,118
3,145
1,752

3,934
2,993
1,941

¥ 186,076
79,50874,43950,11151,50780,634¥ 193,971 ¥ 196,234 ¥ 204,774 ¥ 188,361 ¥ 199,383
81,49780,19982,61777,50988,88874,80770,45673,73364,27680,48746,02245,84948,88544,58554,30147,66847,62250,85545,74255,43185,79689,26594,714
92,47577,907

¥

¥

Yen

7.37
2.00
123.99
87.1
12.9
10.8
2.0
1.8

87.6
12.4
11.0
1.4
(1.1)

88.4
11.6
9.9
1.7
0.3

89.1
10.9
9.8
1.1
0.4

88.8
11.2
9.8
1.4
(3.7)

85.1
14.9
8.2
6.8
4.0

6.2
1.6
1.6
26.9

(3.6)
(0.9)
1.9
23.7

1.2
0.3
1.9
23.4

1.3
0.3
1.9
23.9

(12.0)
(3.1)
2.1
23.7

15.5
4.1
1.4
27.2

27.2
1.6
0.9
109

—
—
0.7
80

—
—
0.8
86

—
—
0.9
114

—
3.2
0.7
82

28.2
4.5
1.4
183

Notes: 1. Return on equity = Net income / Average total equity × 100
2. Return on assets = Net income / Average total assets × 100
3.	Debt-to-equity (D/E) ratio = Interest-bearing liabilities (fiscal year-end) /Total equity [Shareholders’ equity] (fiscal year-end)
4.	Equity ratio = Total equity [Shareholders’ equity] (fiscal year-end) /Total assets (fiscal year-end) × 100

16(4.11) ¥1.39 ¥
1.45 ¥ (14.64) ¥ 21.26
0.00
0.00
0.00
4.00
6.00
113.88113.45120.96110.31134.33

5. Dividend payout ratio = Total cash dividends / Consolidated net income × 100
6. Dividends on equity (DOE) ratio = Total cash dividends / Average net assets × 100
7. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share

Financial Review
Revenue and Expenses
In fiscal 2013, ended March 31, 2013, consolidated net sales totaled ¥165,540 million, up 5.1% compared with the previous fiscal year. This was despite a 60.6% yearon-year sales decline in the fuels business stemming from the sale on October 1, 2012of all of the Company’s shares in Furukawa Commerce Co., Ltd. The increase in net
sales stemmed from various factors. For example, the UNIC Machinery segment posted a 28.2% increase in sales, to ¥20,651 million, benefiting from a rise in domestic
truck registrations and solid reconstruction demand. Also, the Metals segment reported a 14.4% increase in sales, to ¥77,945 million, owing largely to growth in revenue from electrolytic copper. This was despite a decline in electrolytic copper production in the previous fiscal year following the Great East Japan Earthquake.
Cost of sales rose 4.4%, to ¥144,225 million, and the cost of sales margin was
down 0.5 percentage point, to 87.1%.
Selling, general and administrative (SG&A) expenses rose 3.7%, to ¥17,952 million.
As a result, operating income jumped 56.1% from the previous fiscal year, to¥3,363 million. Contributing to earnings were the UNIC Machinery segment, with
operating income surging 138.5%, to ¥2,213 million, on the back of higher sales; theIndustrial Machinery segment, with 10.0% growth in operating income, to ¥779 million; and the Paints segment, with operating income of ¥66 million, compared with
an operating loss of ¥329 million in the previous fiscal year. By contrast, the Construction and Mining Machinery (Rock Drills) segment reported an operating loss of ¥68
million, compared with operating income of ¥334 million in the previous fiscal year.
Accordingly, the operating margin rose 0.6 percentage point, to 2.0%.
Among other income, there was a ¥994 million gain on sales of investment securities, ¥1,264 million in compensation income, and an ¥824 million gain on sales ofsubsidiaries’ stocks. By contrast, other expenses included a ¥1,259 million interest
expense, a ¥63 million loss on sales and retirement of noncurrent assets, and a ¥331
million impairment loss.
As a result, the Group reported income before income taxes and minority interestsof ¥5,433 million. Total income taxes—the sum of inhabitants’ tax, enterprise tax, andcorporate income tax adjustments—amounted to ¥2,278 million, and minority interests totaled ¥179 million. Accordingly, the Group posted net income of ¥2,976 million, compared with a net loss of ¥1,659 million in the previous fiscal year.
Return on equity improved to 6.2%, and net income per share was ¥7.37, compared with a net loss per share of ¥4.11 in the previous fiscal year.
Financial Position
At March 31, 2013, total assets stood at ¥186,076 million, down 4.1% from a year
earlier. During the year, the Company sold all of its shareholdings in Tohpe Corporation, a consolidated subsidiary. Accordingly, that company and its consolidated subsidiaries have been excluded from the consolidated balance sheets for the year underreview. As a result, current assets declined 2.4%, to ¥79,508 million, due mainly to adecrease in notes and accounts receivable, and property, plant and equipment was
down 7.1%, to ¥79,023 million, due mainly to a decline in land. By contrast, investments and other assets edged up 0.6%, to ¥27,545 million.
Total liabilities declined 8.0%, to ¥134,569 million. This was due primarily to a¥44,244 million, or 19.3%, decrease in long-term liabilities. As a result, the fiscal yearend balance of interest-bearing liabilities (debt) declined 6.0%, to ¥80,634 million.

Net Sales(Billions of yen)

200
165.6

161.9
142.9

150

157.6

165.5

100

50

0

'09/3 '10/3 '11/3 '12/3 '13/3

Operating Income
Operating Margin(Billions of yen)

4

(%)

1.7
3

1.4

2.0

2.0
3.4

1.5

2.8
1.4

2.3

2.2

1.1

2

1.0

1.6
1

0

0.5

0.0

'09/3 '10/3 '11/3 '12/3 '13/3

Net Income (Loss)
Return on Sales(Billions of yen)

10

(%)

5.0

5

2.5
3.0
0.6

0

1.8

0.4 0.6 0.3
(1.7)

0.0
(1.1)

-5
(5.9)

-2.5
(3.7)

-10

'09/3 '10/3 '11/3 '12/3 '13/3-5.0

Annual Report 2013 17

Net assets at fiscal year-end stood at ¥51,507 million, up 8.1% from a year earlier.
This was mainly due to a decrease in translation adjustments. Consequently, the equity ratio rose 3.2 percentage points, to 26.9%, and the debt-to-equity (D/E) ratio
declined from 1.9 to 1.6 times.

(Yen)

Net Income (Loss) per Share20

10

R&D and Capital Expenditures
The Furukawa Company Group is actively engaged in R&D on new materials and highvalue-added products that meet diversified market needs. In the year under review,
total research and development expenses amounted to ¥2,559 million, down 2.4%
from the previous year. Of this total, ¥157 million was allocated to the Industrial Machinery segment, ¥635 million to the Construction and Mining Machinery (Rock Drills)
segment, ¥214 million to the UNIC Machinery segment, ¥1,223 million to the Electronic Materials segment, ¥82 million to the Chemicals segment, and ¥245 million to
the Paints segment.
Capital expenditures (the increase in tangible fixed assets and intangible fixed assets) amounted to ¥2,926 million. Of this total, ¥295 million was allocated to the Industrial Machinery segment, ¥472 million to the Construction and Mining Machinery(Rock Drills) segment, ¥210 million to the UNIC Machinery segment, ¥386 million to
the Metals segment, ¥231 million to the Electronic Materials segment, ¥102 million to
the Chemicals segment, and ¥338 million to the Paints segment, aimed primarily at
improvements in production efficiency. In addition, ¥799 million was allocated to theReal Estate segment, mainly for the Nihonbashi-Muromachi Eastern District Redevelopment Project, and ¥89 million went to the Others segment for the purchase of vehicles for use in the transportation business. All funds required for capital expenditures were derived from internal funds and borrowings. Depreciation and amortization
declined 9.4%, to ¥3,015 million.
The Group’s capital expenditure budget is based on comprehensive considerationof various factors, including demand forecasts, production plans, and investment benefits. In fiscal 2014, ending March 31, 2014, the Group plans to invest a total of ¥12.0
billion, mainly for the purchase of new facilities and the repair of existing ones. We
expect to procure these funds via borrowings and/or internal funds.
Cash Flows
In the year under review, net cash provided by operating activities amounted to¥5,491 million, up 10.3% from the previous year. The main factor was income before
income taxes and minority interests.
Net cash used in investing activities totaled ¥2,253 million, down 28.5% from theprevious fiscal year. The primary component was purchases of property, plant andequipment.
Net cash provided by financing activities was ¥252 million, compared with net cashused in financing activities of ¥3,782 million in the previous fiscal year. This was mainly due to proceeds from long-term debt.
As a result, cash and cash equivalents at the end of the fiscal year totaled ¥17,964
million, a ¥3,810 million, or 26.9%, increase from a year earlier.

7.37
1.45

1.39

0
(4.11)-10(14.64)-20(Billions of yen)300

'09/3 '10/3 '11/3 '12/3 '13/3

Total Assets
Return on Assets

200 188.4

204.8 196.2(%)

8

194.0 186.1 4
1.6

0.3

100

0.3
0
(0.9)

0

(Billions of yen)

60

(3.1)

'09/3 '10/3 '11/3 '12/3 '13/3

Net Assets
Return on Equity
50.9

45

45.7

(%)

20

47.7

51.5
10
6.2

1.3

30

47.6

-4

1.2

0
(3.6)

15

-10
(12.0)

0

18'09/3 '10/3 '11/3 '12/3 '13/3-20

Capital Strategies
Furukawa places great importance on improving returns of profits to all shareholders.
Our basic policy is to appropriate profits after comprehensive consideration of various
factors, including retained earnings required to finance capital expenditures and research and development expenses necessary to bolster earnings, as well as futurebusiness development and other factors. In principle, we appropriate retained earnings to shareholders twice a year in the form of interim and year-end cash dividends.
The decision-making body for the year-end dividend is the Annual General Meeting of
Shareholders, while that for the interim dividend is the Board of Directors’ meeting.
The Articles of Incorporation states that “subject to resolution of the Board of Directors, interim dividends may be paid, with September 30 of each year as the date ofrecord.”For fiscal 2013, the Company has declared a year-end dividend of ¥2.00 per share.
Facing rapidly changing economic conditions in Japan and overseas, we will deploy
retained earnings to further enhance our business performance and improve our financial position. Specifically, we will make careful and effective investments aimed atstrengthening the technological capabilities of our Machinery business while promoting further business development overseas. In the Metals segment, meanwhile, wewill invest in mines and promote development activities aimed at new product commercialization.

Equity Ratio

(%)

30

26.9
23.7

23.9

23.4 23.7

20

10

0

(Times)'09/3 '10/3 '11/3 '12/3 '13/3

Debt-to-Equity (D/E) Ratio

4

Business Risks(1) Fluctuations in the Foreign Exchange and Nonferrous Metals Markets
The Furukawa Company Group is at risk of foreign exchange fluctuations in connection with its export business, the import of raw materials, primarily copper ore, andsmelting and processing income. In addition, the Furukawa Company Group’s stockof nonferrous metal inventories, an internationally traded commodity, is subject tomarket movements. While the Group utilizes foreign exchange contracts and forward
delivery transactions as a hedge against the aforementioned risks, its operating results
and financial position may be adversely affected by movements in exchange rates andnonferrous metal markets.
(2) Investments in Securities and Land
Historically, the Furukawa Company Group has maintained relatively high balances ofmarketable securities and land. As of March 31, 2013, the carrying value of investments in securities as stated in the balance sheets was ¥17,535 million, while landstood at ¥55,006 million. Accordingly, the Group’s operating results and financial
position are at risk of impairment losses, losses from devaluation, and losses on sales
due to movements in stock and land prices.
(3) Accrued Employees’ Retirement Benefits
The employees of the Furukawa Company Group are covered by a defined contribution corporate pension plan and a single-payment retirement benefit plan. Accrued
employees’ retirement benefits are provided at an amount calculated based on the

3
2.1
2

1.9

1.9

1.9
1.6

1

0

(%)

4

'09/3 '10/3 '11/3 '12/3 '13/3

Dividends on Equity (DOE)
Ratio
3.2

3

2

1.6

1

0

0.0 0.0

0.0'09/3 '10/3 '11/3 '12/3 '13/3

Annual Report 2013 19

retirement benefit obligation and the fair value of pension plan assets at the balance
sheet date. In calculating accrued employees’ retirement benefits, the Group adopts
assumptions in connection with the discount rate and expected rate of return on plan
assets, as well as other assumptions. Accordingly, the Group’s operating results andfinancial position are at risk in the event the actual discount rate and expected rate of
return on plan assets differs materially from the assumptions, as well as in the eventof a change in the assumptions on which accrued employees’ retirement benefits aremade.
(4) Earthquakes and Other Natural Disasters
The Furukawa Company Group’s operating results and financial position are at risk inthe event of a suspension in operations and delays in production and/or shipments
due to damage to manufacturing bases and facilities from earthquakes and othernatural disasters.
(5) Environmental Protection
The Furukawa Company Group places the highest importance on environmental protection, environmental safety, and prevention of pollution at its various business sites,
both in Japan and overseas, respecting all laws and regulations. Furthermore, in Japan
the Group is vigilant in preventing water run-off from idle mines from contaminatingwater supplies and in preventing the buildup of slag or slurry. However, in the eventof changes in legislation and the like, there is a possibility that the Group’s performance results and its financial position could be influenced.

(Billions of yen)

20

17.1
15

10

5

3.1 2.5 3.2

0

2.1

3.3 3.6 3.3 2.9 3.0'09/3 '10/3 '11/3 '12/3 '13/3

Cash Flows
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities(Billions of yen)

15

12.1
9.1

10
5

(6) Dilution of Shares Due to Exercise of New Stock Acquisition Rights
The Furukawa Company Group seeks to procure investment capital in a flexible manner to fund overseas investments and other initiatives. To this end, the Board of Directors, at its meeting held on December 20, 2010, passed a resolution to issue newstock acquisition rights in a third-party allotment, with the recipient being Mizuho
Securities Co., Ltd. The new stock acquisition rights were subsequently issued on
January 5, 2011. In the event that said rights are exercised, the per-share value of theCompany’s shares may become diluted.

Capital Expenditures
Depreciation andAmortization

5.1

3.7

5.0

5.5
0.3

0
(1.6)

(3.2) (3.8)(3.6)(4.8) (5.7)

-5

(2.3)

-10
-15
-20

(Yen)

(11.5)'09/3 '10/3 '11/3 '12/3 '13/3

Cash Dividends per Share

6

4

4.00

2.00

2

0

20

0.00

0.00

0.00

'09/3 '10/3 '11/3 '12/3 '13/3

Financial Section
22
Consolidated Balance Sheets
24
Consolidated Statements of Operations
25
Consolidated Statements of Comprehensive Income
26
Consolidated Statements of Changes in Net Assets
28
Consolidated Statements of Cash Flows
29
Notes to Consolidated Financial Statements
50
Independent Auditors' Report

Annual Report 2013 21

Consolidated Balance Sheets
Furukawa Co., Ltd. and consolidated subsidiaries
As of March 31, 2013 and 2012
Thousands of
U.S. dollars (Note 4)

Millions of yen

2013

ASSETS

2013

2012

Current Assets:
Cash and cash equivalents¥

Short-term investments

17,964¥

14,154$

189,095—

49—

22,942

28,993

241,495

572

693

6,021

12,761

12,526

134,326

Receivables - trade:
Notes and accounts
Affiliates
Finished products
Work in process

6,961

6,399

73,274

Raw materials and supplies

11,818

11,883

124,400

Deferred tax assets (Note 14)

1,299

1,945

13,674

Other current assets

5,291

4,973

55,694

Allowance for doubtful accounts

(100)

(118)

(1,053)79,50881,497

836,926

Land and timberlands

56,86360,510598,558

Buildings and structures

41,49845,030436,821

Machinery and equipment

46,36450,072

488,042

Lease assets (Note 10)

1,616

1,632

17,011

Construction in progress

2,894

1,843

30,463

		Total current assets

Property, Plant and Equipment, at Cost (Notes 6 and 19):

149,235

159,087

1,570,895

Accumulated depreciation(70,212)(74,001)(739,074)

		 Property, plant and equipment, net

79,02385,086

831,821

Investments and Other Assets:
65

437

684

Investment securities (Notes 5 and 6)

19,87817,982

209,242

Investments in affiliates

4,804

5,165

50,568Long-term loans receivable

1,725

1,333

18,158Deferred tax assets (Note 14)

69

132

726

Goodwill

Other assets

1,996

3,887

21,012

Allowance for doubtful accounts(992)(1,548)(10,442)

27,545

		 Total investments and other assets
		Total assets

22¥

186,076

289,948

27,388¥

193,971$

1,958,695

Thousands of
U.S. dollars (Note 4)

Millions of yen

2013

LIABILITIES AND NET ASSETS

2013

2012

Current Liabilities:
Short-term debt (Note 6)¥

10,738¥12,897$113,032

25,652

18,042270,021

274

311

2,884

24,52926,019258,200

3

432

Accrued expenses

9,289

13,90197,779

Income taxes payable

1,058

458

11,137

Current portion of long-term debt (Note 6)
Lease obligations (Note 6)
Payables - trade:
Notes and accounts
Affiliates

14

37

147

Other current liabilities

2,882

3,138

30,337

		 Total current liabilities

74,43974,807

783,569

Long-term debt (Note 6)

44,24454,858465,726

Lease obligations (Note 6)

578

701

6,084

1,050

1,694

11,053

Deferred tax liabilities (Note 14)

Long-Term Liabilities:

Accrued employees’ retirement benefits (Note 13)

163

176

1,716

Deferred tax liabilities (Note 14)
Deferred tax liabilities on surplus on the revaluation of land
(Note 14)
Asset retirement obligations

8,255

8,146

86,895

2,346
201

2,370
196

24,695
2,116

Other long-term liabilities

3,293

3,355

34,662

		 Total long-term liabilities

60,13071,496

632,947

28,20828,208296,926

18,581

15,704

195,590

(47)

(46)

(495)

Provision for environmental measures

Net Assets (Note 7):
Shareholders’ equity:
Common stock without par value:
		Authorized—800,000,000 shares
		Issued—404,455,680 shares
Retained earnings
Treasury stock, at cost:		2013—318,422 shares

—

—

—

46,742

43,866492,021

Unrealized holding gain (loss) on securities, net of income taxes

2,727

2,162

28,705

Deferred gain (loss) on hedges

(390)

(191)

(4,105)

		2012—313,540 shares
		 Total shareholders’ equity
Accumulated other comprehensive income:Surplus on the revaluation of land, net of income taxes

3,673

3,578

38,663

Translation adjustments(2,641)(3,393)(27,800)

3,369

2,156

35,463

		 Total accumulated other comprehensive income
Subscription rights to shares
Minority interests

53

558

1,593

14,13751,507

		 Total net assets
		 Total liabilities and net assets

53
1,343
¥

186,076

542,179

47,668¥

193,971$

1,958,695

The accompanying notes are an integral part of these statements.
Annual Report 2013 23

Consolidated Statements of Operations
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of
U.S. dollars (Note 4)

Millions of yen

2013

Net Sales¥

Cost of Sales (Note 16)

2013

2012

165,540¥(144,225)

157,566$

1,742,526(1,518,158)(138,097)

		Gross profit

21,315

19,469224,368

Selling, General and Administrative Expenses (Note 9)(17,952)(17,314)(188,968)

3,363

2,155

35,400

369

865

3,884

		Operating income
Other Income (Expenses):
Interest and dividend income

(332)

14

(3,495)Interest expense(1,259)(1,404)(13,253)

Other income (expenses), net (Notes 17 and 19)

3,292(4,293)34,653

		 Income (Loss) before income taxes and minority interests

5,433(2,663)57,189(14,379)

Equity in earnings (losses) of affiliates

Income Taxes (Note 14):
Current(1,366)(509)

Deferred

(912)

1,379

(9,599)

		 Total income taxes(2,278)870(23,978)

Income (Loss) Before Minority Interests

3,155(1,793)33,211

Minority Interests

(179)

134

(1,885)

		 Net income (loss)

¥

2,976

¥

(1,659)$Yen

31,326
U.S. dollars (Note 4)

Net Income (Loss) per Share:
Basic
Net Assets per Share
The accompanying notes are an integral part of these statements.

24

¥

7.37
123.99¥(4.11)
113.88

$

0.08
1.31

Consolidated Statements of Comprehensive Income
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of
U.S. dollars (Note 4)

Millions of yen

2013

Income (Loss) Before Minority Interests

¥

2013

2012

3,155

¥

(1,793)$33,211Other Comprehensive Income (Loss):
Unrealized holding gain (loss) on securities, net of income taxes

559

Deferred gain (loss) on hedges

1,888

5,884
(2,063)

(196)

(85)

Surplus on the revaluation of land, net of income taxes

—

354

—

Translation adjustments
Share of other comprehensive income (loss) of associates­accounted for using equity method
		 Total other comprehensive income (Note 8)

450

(177)

4,737

320

(129)

3,368

1,133

1,851

11,926Comprehensive Income

4,288

58

45,137

4,081

173

42,958

207

(115)

2,179

Comprehensive Income (Loss) Attributable to:Shareholders of Furukawa Co., Ltd.
Minority interests
The accompanying notes are an integral part of these statements.

Annual Report 2013 25

Consolidated Statements of Changes in Net Assets
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2013 and 2012

For the year ended March 31, 2013

Millions of yen
Number ofshares ofcommonstock(thousands)

Balance at beginning of year

404,456

Shareholders’ equity
Commonstock¥

28,208Retainedearnings

Treasury stock,at cost15,704¥¥

Total
shareholders’equity(46)¥

43,866

Cash dividends paid

—

—

—

—

—

Net income (loss) for the year

—

—

2,976

—

2,976

Purchase of treasury stock

—

—

—

(1)

(1)

Reversal of surplus on the revaluation of land

—

—

(99)

—

(99)

Net change during the year

—

—

—

—

—

Balance at end of year

404,456¥

28,208For the year ended March 31, 2013¥

18,581¥(47)¥

46,742Millions of yen
Accumulated other comprehensive income

Balance at beginning of year

Unrealized
holding gain
(loss) on
securities, net ofincome taxes

Deferred gain
(loss) on
hedges

¥

¥

2,162

Surplus on therevaluation ofland, net ofincome taxes

Translation
adjustments

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares(191) ¥ 3,578 ¥ (3,393) ¥ 2,156 ¥Minority
interests

Total
net assets

53 ¥ 1,593 ¥47,668

Cash dividends paid

—

—

—

—

—

—

—

—

Net income (loss) for the year

—

—

—

—

—

—

—

2,976

Purchase of treasury stock

—

—

—

—

—

—

—

(1)

Reversal of surplus on the revaluation of land

—

—

—

—

—

—

—

(99)

Net change during the year

565

(199)

95

752

1,213

—

(250)

963

Balance at end of year

¥

2,727

¥

(390) ¥ 3,673 ¥ (2,641) ¥ 3,369 ¥For the year ended March 31, 2012

Millions of yen
Number ofshares ofcommonstock(thousands)

Balance at beginning of year
Cash dividends paid

53 ¥ 1,343 ¥51,507

404,456

Shareholders’ equity
Commonstock¥—

28,208¥Retainedearnings

Treasury stock,at cost17,310

¥

(46)

Total
shareholders’equity¥45,472————

Net income (loss) for the year——

(1,659)—(1,659)Purchase of treasury stock

—

—

—

(0)

(0)
53

Reversal of surplus on the revaluation of land

—

—

53

—

Net change during the year

—

—

—

—

Balance at end of year26

404,456¥

28,208¥15,704

¥

(46)

—
¥

43,866

For the year ended March 31, 2012

Millions of yen
Accumulated other comprehensive income

Balance at beginning of year

Unrealized
holding gain
(loss) on
securities, net ofincome taxes

Deferred gain
(loss) on
hedges¥¥294

Surplus on therevaluation ofland, net ofincome taxes

Translation
adjustments

Total
accumulated
othercomprehensive
income(110) ¥ 3,289 ¥ (3,096) ¥Subscription
rights toshares377 ¥Minority
interests

Total
net assets

53 ¥ 1,720 ¥47,622

Cash dividends paid

—

—

—

—

—

—

—

—

Net income (loss) for the year

—

—

—

—

—

—

—

(1,659)Purchase of treasury stock

—

—

—

—

—

—

—

(0)

Reversal of surplus on the revaluation of land
Net change during the year
Balance at end of year

¥

—

—

—

—

—

—

—

53

1,868

(81)

289

(297)

1,779

—

(127)

1,652

2,162

¥

(191) ¥ 3,578 ¥ (3,393) ¥ 2,156 ¥For the year ended March 31, 201353 ¥ 1,593 ¥47,668

Thousands of U.S. dollars (Note 4)
Shareholders’ equity

Balance at beginning of year

Commonstock

Retainedearnings$ 296,926$ 165,305

Total
shareholders’equityTreasury stock,at cost$(484)$ 461,747

Cash dividends paid

—

—

—

—

Net income (loss) for the year—

31,326—31,326

Purchase of treasury stock

—

—

(11)

(11)

Reversal of surplus on the revaluation of land—

(1,041)—(1,041)

Net change during the year

—

—

—

—

$ 296,926$ 195,590(495)$ 492,021

Balance at end of year

For the year ended March 31, 2013$

Thousands of U.S. dollars (Note 4)
Accumulated other comprehensive income

Balance at beginning of year

Total
accumulated
othercomprehensive
incomeUnrealized
holding gain
(loss) on
securities, net ofincome taxes

Deferred gain
(loss) on
hedges$ 22,758$ (2,010) $ 37,663 $ (35,716) $ 22,695 $Surplus on therevaluation ofland, net ofincome taxes

Translation
adjustments

Subscription
rights tosharesMinority
interests

Total
net assets

558 $ 16,769 $501,769

Cash dividends paid

—

—

—

—

—

—

—

—

Net income (loss) for the year

—

—

—

—

—

—

—

31,326

Purchase of treasury stock

—

—

—

—

—

—

—

(11)

Reversal of surplus on the revaluation of land

—

—

—

—

—

—

—

(1,041)(2,095)

1,000

7,916

12,768—(2,632)

10,136

Net change during the year
Balance at end of year

5,947
$ 28,705$ (4,105) $ 38,663 $(27,800) $ 35,463 $558 $ 14,137 $542,179

The accompanying notes are an integral part of these statements.

Annual Report 2013 27

Consolidated Statements of Cash Flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2013 and 2012
Thousands of
U.S. dollars (Note 4)

Millions of yen

2013

Operating Activities:
Income (Loss) before income taxes and minority interests
Depreciation and amortization
Decrease in allowance for doubtful accounts, net
Increase in accrued employees’ retirement benefits
Gain (Loss) on sales of investment securities
Gain on sales of subsidiaries’ stocks
Compensation income
Interest and dividend income
Interest expense
Impairment loss on property, plant and equipment
Changes in operating assets and liabilities:
Receivables - trade
Inventories
Payables - trade
Other		Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Income taxes refunded
Compensation received
		 Net cash provided by operating activities

¥

5,433
3,015
(247)
1,248
(994)
(824)
(1,264)
(369)
1,259
331

2013

2012

¥

(2,663)
3,329
(324)
1,107
1,024
—
(632)
(865)
1,404
101

$

57,18931,737(2,600)13,137(10,463)(8,674)(13,305)(3,884)
13,253
3,484

794(2,549)3,914(4,076)
5,671
388(1,287)
(846)
301
1,264
5,491

(4,561)(1,209)
2,376
6,194
5,281
886
(1,409)
(777)
365
632
4,978

8,358
(26,832)
41,200(42,905)
59,695
4,084(13,547)(8,905)
3,168
13,30557,800Investing Activities:
Increase in time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investments
Increase in long-term loans receivables
Proceeds from sales of investments in subsidiaries resulting in change inscope of consolidation
Other
		 Net cash used in investing activities(300)(2,439)429(3,032)
2,531
505
(340)

(0)
(2,989)
707
(978)
7
—
(2)

(3,158)(25,674)
4,516(31,916)
26,642
5,316(3,579)31281(2,253)—102(3,153)

3,284
853(23,716)

Financing Activities:
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from short-term debt
Repayment of short-term debt
Repayment of finance lease obligations
Other
		 Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year

16,860(18,130)
10,743(8,851)
(360)
(10)
252
320
3,810
14,154
17,964

13,750(17,258)
9,900(9,862)(310)(2)(3,782)(160)(2,117)
16,271
14,154

177,474(190,842)
113,084(93,168)(3,789)
(106)
2,653
3,368
40,105
148,990
189,095

The accompanying notes are an integral part of these statements.

28

¥

¥

$

Notes to Consolidated Financial Statements
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2013 and 2012

1. Basis of Presentation
The accompanying consolidated financial statements of ­Furukawa
Co., Ltd. (the “Company”) and consolidated subsidiaries(together the “Furukawa Group”) are prepared in accordancewith accounting principles generally accepted in Japan, which
are different in certain respects as to the application anddisclosure requirements of International Financial ReportingStandards, and are compiled from those prepared by theCompany as required under the Financial Instruments andExchange Law of Japan.
The notes to the consolidated financial statements include
2. Summary of Significant Accounting Policies(1) Principles of Consolidation
The Company had 47 subsidiaries and 16 affiliates as of March
31, 2013 (46 subsidiaries and 16 affiliates as of March 31,2012). The consolidated financial statements included the­accounts of the Company and 47 subsidiaries as of March 31,
2013 (46 as of March 31, 2012).
Compared with the previous year, the number of subsidiaries
increased by 1 subsidiary due to the acquisition.
For the purpose of preparing the consolidated financial
statements, all significant inter-company transactions, accountbalances and unrealized profits among the Furukawa Group
have been eliminated.
Certain foreign subsidiaries have been included on the basisof a fiscal year ended on December 31, but prior to the parent
company’s fiscal year ended on March 31. Relevant adjustments
have been made for significant transactions with such
subsidiaries during the intervening period from January 1 toMarch 31.
Investments in subsidiaries and affiliates which are notaccounted for by the equity method are carried at cost becauseof their immaterial impact on the consolidated financial
statements.
(2) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investmentswith a maturity of three months or less when purchased.
(3) Short-Term Investments and Investment Securities
Securities other than equity securities issued by subsidiaries andaffiliates are classified into three categories: trading, held-tomaturity or other securities. The Furukawa Group does not holdany trading or held-to-maturity securities as of March 31, 2013
and 2012. Marketable securities classified as other securities arecarried at fair value with changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net
assets. Fair value is determined based on the average of theinformation which is not required under accounting principles
generally accepted in Japan but is presented herein as additional
information.
In preparing these statements, the Company makes certain
reclassifications and rearrangements to the consolidated
financial statements prepared in Japan in order to present thesestatements in a form which is more familiar to readers outside
Japan.
Certain amounts in the prior year’s financial statements havebeen reclassified to conform to the current year’s presentation.

­ arket value during the last month of the fiscal year. Non-­mmarketable securities classified as other securities are carried atcost. Cost of securities sold is determined by the moving averagemethod.
(4) Inventories
Finished products and work in process relating to copper
products are stated at cost determined by the moving averagemethod (the balance sheet amounts of inventories are stated at
the lowered book values reflecting potential decline inprofitability). Other inventories are mainly stated at cost
determined by the average method (the balance sheet amounts
of inventories are stated at the lowered book values reflecting
potential decline in profitability).
(5) Allowance for Doubtful Accounts
In order to cover probable losses on collection, the allowance for
doubtful accounts is calculated based on the historical default
rates for normal receivables plus estimate of uncollectible
amounts determined by reference to specific doubtful receivablesfrom customers who are experiencing financial difficulties.
(6) Provision for Environmental Measures
Provision for environmental measures is provided to cover the
disposal costs anticipated to be incurred with respect to the“Law Concerning Special Measures for Promotion of Proper
Treatment of PCB Wastes.”(7) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciationof property, plant and equipment except for lease assets ismainly calculated by the straight-line method based on theestimated useful lives of the assets. The range of useful lives ofproperty, plant and equipment is summarized as follows:
Buildings and structures
5 to 60 years
Machinery and equipment
2 to 22 years

Annual Report 2013 29

Amortization is calculated by the straight-line method for
intangible assets except for lease assets.
Depreciation of lease assets arising from finance leasetransactions that do not involve transfer of ownership is
calculated by the straight-line method over the lease term withno residual value. Finance lease transactions that do not involve
transfer of ownership, entered into on and before March 31,
2008, by the Company and domestic consolidated subsidiaries
are accounted for as operating leases.
(8) Amortization of Goodwill
Goodwill is amortized by the straight-line method over five
years.
(9) Retirement Benefit Plans
The employees of the Company and most of its domestic
consolidated subsidiaries are covered by defined benefit
corporate pension plans and non-contributory funded employee
pension plans as defined benefit plans. The employee retirement
benefit plans provide for lump-sum payments. The employee
pension plans, which are funded, were instituted to replace acertain portion of the benefits under the retirement benefit
plans with respect to employees who retire at the mandatory
retirement age. Certain consolidated subsidiaries (both domestic
and foreign) have defined contribution plans.
Accrued employees’ retirement benefits have been provided
at an amount calculated based on the retirement benefit
obligation and the fair value of the pension plan assets at thebalance sheet dates, as adjusted for unrecognized actuarial gainor loss and unrecognized prior service cost. The retirement
benefit obligation has been attributed to each period by thestraight-line method over the years of service of the eligible
employees.
The net obligation at transition of the listed subsidiary, whichamounts to ¥1,940 million ($20,421 thousand), is being
amortized by the straight-line method over a period of 15 years.
Prior service cost is being amortized as incurred by thestraight-line method over a period of principally 15 years, whichis shorter than the average remaining years of service of theemployees. Actuarial gain and loss is amortized in the year
following the year in which the gain or loss is recognized by thestraight-line method over the period of mainly 15 years, which isshorter than the average remaining years of service of theemployees.
(10) Surplus on the Revaluation of Land
Pursuant to the “Law Concerning the Revaluation of Land,”land used for the Company’s business operations was revalued
on March 31, 2002. The income tax effect of the difference

30

between the book value and the revalued amount has beenpresented under liabilities as “Deferred tax liabilities on surplus
on the revaluation of land” and the remaining balance has beenpresented under net assets as “Surplus on the revaluation ofland, net of income taxes” in the accompanying consolidatedbalance sheets. Revaluation of land was determined based on
the official notice prices published by the Commissioner of the
National Tax Authorities in accordance with Paragraph 4, Article
2 of the “Enforcement Ordinance Concerning Land Revaluation,”with relevant adjustments. The carrying value of the land after
revaluation exceeded its fair value by ¥1,768 million ($18,611
thousand) and ¥1,686 million as of March 31, 2013 and 2012,
respectively.
(11) Income Taxes
Current income taxes comprising corporation tax, enterprise tax
and inhabitants’ taxes are provided for based on amounts
currently payable for each year. Deferred income taxes arisingfrom temporary differences between financial reporting and tax
bases of the assets and liabilities, which were measured using
the enacted tax rates and laws which will be in effect when thetemporary differences are expected to reverse, are reflected in
the consolidated financial statements.
The Company and its domestic wholly-owned subsidiaries
file a consolidated corporation tax return.
(12) Amounts per Share
Basic net income (loss) per share is computed based on the net
income (loss) available for distribution to shareholders ofcommon stock and the weighted-average number of shares ofcommon stock outstanding during the year. Diluted net income
per share is not presented since the Company recorded net loss
per share for the year ended March 31, 2012 and no dilutive
instruments were issued and outstanding for both of the years
ended March 31, 2013 and 2012.
Net assets per share are computed based on the net assets
excluding minority interests and the number of common stock
outstanding at the year-end.
(13) Foreign Currency Translation
Foreign currency-denominated monetary assets and liabilities
are translated into Japanese yen using the rates of exchange in
effect at the balance sheet date. Differences arising from thetranslation are included in the consolidated statements ofoperations.
The balance sheet accounts of the foreign consolidated
subsidiaries are translated into yen at the rates of exchange in
effect at the balance sheet date, except for the components of
net assets excluding minority interests, which are translated attheir historical exchange rates. Revenue and expense accounts
are translated at the average rate of exchange in effect during
the year. Differences arising from the translation are presented
as translation adjustments and minority interests in the
consolidated financial statements.
(14) Hedging Activities
The Furukawa Group uses derivative financial instruments forthe purpose of hedging the risks of adverse fluctuations inforeign exchange rates on the trade receivables, trade payables
and forecast transactions denominated in foreign currencies,
commodity prices and interest rates. All derivative financial
instruments except those below are stated at fair value andrelated gain or loss on the changes in the fair values of derivative
financial instruments is deferred as a component of net assets inthe balance sheet until the recognition of gain or loss on hedged
items when those derivative financial instruments qualify forhedge accounting.
Trade receivables, trade payables and forecast transactions
denominated in foreign currencies are translated at thecontracted rates if the relating forward contracts qualify forhedge accounting.
The interest rate swaps which qualify for hedge accounting
and meet specific matching criteria are not carried at fair value,
but any differences paid or received on the interest rate swaps
are recognized as adjustments to interest expense or income
over the life of each swap, thereby adjusting the effective
interest rate on the hedged items.
(15) Shareholders’ Equity
The Company Law of Japan provides that an amount equal to
10% of the amount to be distributed as distributions of capitalsurplus (other than the capital reserve) and retained earnings(other than the legal reserve) be transferred to the capital reserveand the legal reserve respectively, until the sum of the capitalreserve and the legal reserve equals 25% of the common stock
account. Such distributions can be made at any time byresolution of the shareholders or by the Board of Directors if
certain conditions are met, but neither the capital reserve nor
the legal reserve is available for distributions.

3. Unapplied Accounting Standard, etc.
“Accounting Standard for Retirement Benefits” (AccountingStandards Board of Japan (ASBJ) Statement No. 26 of May 17,2012), and “Guidance on Accounting Standard for Retirement
Benefits” (ASBJ Guidance No. 25 of May 17, 2012)(1) Outline
Under the revised accounting standard, actuarial gains andlosses and past service costs shall be recognized within net
assets on the consolidated balance sheets after adjusting for tax
effects, and the accumulated deficit or surplus shall berecognized as a liability or asset. Also, regarding the estimatedamount of retirement benefits and the method of attributing
them to accounting periods, in addition to the straight-line

attribution standard, the benefit formula may be used and themethod of calculating the discount rate has been revised.
(2) Scheduled date of adoption
This accounting standard will be adopted from the beginning of
the year ending March 31, 2014. However, as no retrospective
application of this accounting standard is required it will not beapplied to consolidated financial statements for prior periods.
(3) Impact of adoption of the revised accounting standard
The impact in the consolidated financial statements as a result of
the adoption of the revised accounting standard is currently
being evaluated.

4. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience, as a matter of arithmetic
computation only, at ¥95=US$1.00, the exchange rate prevailingon March 31, 2013. This translation should not be construed asa representation that yen have been, could have been or couldin the future be converted into U.S. dollars at the above or any
other rate.

Annual Report 2013 31

5. Investment Securities
The aggregate acquisition cost, carrying value and unrealized gain or loss pertaining to the marketable other securities as of March 31,
2013 and 2012 were as follows:
Millions of yen

Thousands of U.S. dollars

2013
Carrying value

Securities whose carrying value exceeds theiracquisition cost:
Listed stocks

2013

Acquisition cost

¥ 13, 838 ¥9,743

Unrealized gain
(loss)

Carrying value¥$ 145,663 $ 102,558 $4,095

Acquisition cost

Unrealized gain
(loss)

43,105Government bonds

—

—

—

—

—

—

Corporate bonds

—

—

—

—

—

—

13, 838

9,743

4,095

145,663

102,558

43,105

3,629

3,914

(285)

38,20041,200(3,000)

17

17

—

179

179

—

Securities whose carrying value does not exceed
their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

¥

51

51

—

537

537

—

3,697

3,982

(285)

38,916

41,916(3,000)17,535 ¥13,725 ¥3,810$ 184,579 $ 144,474 $

40,105

Millions of yen

2012
Carrying value

Securities whose carrying value exceeds theiracquisition cost:
Listed stocks¥

Government bonds

7,715
—

Corporate bonds

Securities whose carrying value does not exceed
their acquisition cost:
Listed stocks
Government bonds
Corporate bonds
Total

Acquisition cost¥

Unrealized gain
(loss)¥ 4,805 ¥
—

2,910
—

—

—

—

7,715

4,805

2,910

7,240

7,824

(584)

18

18

—

94

94

—

7,352

7,936

(584)

15,067 ¥

12,741¥ 2,326

Gain on sales of securities classified as other securities with aggregate gains for the years ended March 31, 2013 and 2012 aresummarized as follows:
Thousands of
U.S. dollars

Millions of yen

2013

Sales proceeds

¥

2013

2012

2,531

¥

7

$

26,642Aggregate gains

994

3

10,463Aggregate losses

—

—

—

32

6. Short-Term Debt, Long-Term Debt and Lease Obligations
Short-term debt, most of which are unsecured, represented notes payable to banks, with the average interest rate of 0.6% and 0.7%
as of March 31, 2013 and 2012.
Long-term debt as of March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2013

Loans, principally from banks, insurance companies and government agencies,
most of which are secured, due 2013 to 2028¥

69,89669,896¥(25,652)

Current portion of long-term debt¥

44,244

¥

2012

2013

72,90072,900$ 735,747
735,747(18,042)(270,021)

54,858$ 465,726

The average interest rates applicable to the above debt amounting to ¥69,896 million ($735,747 thousand) and ¥72,900 million
were 1.2% and 1.4% as of March 31, 2013 and 2012, respectively.
The aggregate annual maturities of long-term debt subsequent to March 31, 2013 are as follows:
Thousands of
U.S. dollars

Millions of yen

2013

Years ending March 31,¥

25,652$ 270,021

2015

16,351

172,1162016

11,684

122,989

2017

8,787

92,495

2018

4,270

44,9472019 and thereafter

3,152

33,17969,896$ 735,747

2014¥
Lease obligations as of March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2013

Lease obligations due 2013 to 2020

¥

852

¥

852
¥

578

$

1,012

(2,884)

(311)
¥

701

8,968
8,968

1,012

(274)

Current portion of lease obligations

2013

2012

$

6,084

The aggregate annual maturities of lease obligations subsequent to March 31, 2013 are as follows:
Thousands of
U.S. dollars

Millions of yen

2013

Years ending March 31,

2014

¥

274

$

2,884

2015

281

2,958

2016

179

1,884

2017

85

895

2018 and thereafter

33
¥

852

347
$

8,968

Annual Report 2013 33

unused balances under these credit facilities amounted to¥19,756 million ($207,958 thousand) and ¥30,658 million($322,716 thousand), respectively, as of March 31, 2013 andamounted to ¥21,856 million and ¥20,987 million, respectively,
as of March 31, 2012.

The Company and certain consolidated subsidiaries haveentered into overdraft and loan commitment agreements
amounting to ¥50,414 million ($530,674 thousand) with 24
banks and ¥42,843 million with 26 banks as of March 31, 2013
and 2012, respectively. The borrowings outstanding and theAssets pledged as collateral and liabilities with collateral pledged as of March 31, 2013 and 2012 were as follows:(a) Assets pledged as collateralThousands of
U.S. dollars

Millions of yen

2013

Investment securities

859

¥

2,405

¥

1,243

¥

7,652

1,546

Property, plant and equipment, net

2013

2012

¥

$

9,042

$

25,316

16,274

6,409(b) Liabilities with collateral pledged
Thousands of
U.S. dollars

Millions of yen

2013

¥

Short-term debt

¥

150

1,004

Long-term debt (including current portion)
¥

2013

2012

—
1,004

$

¥

2,945

—
10,5682,795$

10,568

7. Net Assets(1) Types and number of shares issued and in treasury
Thousands of shares
As of March 31,
2012

Increase

Decrease

As of March 31,
2013

Shares issued:
Common stock		 Total

404,455——

404,455

404,455­——

404,455

313

4

—

318

313

4

—

318

Treasury stock:
Common stock (Note)		 Total

Note: The increase of 4 thousand shares of equity in treasury stock was due to the purchase of shares of less than a standard unit.

(2) Subscription rights to shares
Thousands of shares

Attribution

Parentcompany
Total

Details of
subscription rights
to shares (*)

Type of shares
to be issued upon
exercise of rights

Subscription rights
to shares due 2016

Commonstock

Note: All subscription rights to shares can be exercised.

34

Millions of yen

Number of shares subject to be issued upon exercise of rights
As of March 31,
2012

Increase

Decrease

As of March 31,
2013

Balance as ofMarch 31, 2013

100,000——

100,000

53

100,000——

100,000

53

8. Other Comprehensive Income
Reclassification adjustment and tax effects allocated to each component of other comprehensive income for the years ended March
31, 2013 and 2012 are as follows:
Thousands of
U.S. dollars

Millions of yen

2013

2013

2012

Unrealized holding gain (loss) on securities:
Amounts arising during the year

¥

2,611

¥

(1,309)Reclassification adjustments for gains and losses included in net income(1,057)

3,262$

27,484(11,126)

Amounts before tax effect

1,554

1,953

16,358Tax effect

(995)

(65)

(10,474)

Unrealized holding gain (loss) on securities

559

1,888

5,884

Deferred gain (loss) on hedges:
Amounts arising during the year

(1,610)1,266(16,947)

Adjustment on the acquisition cost of assets

1,347(1,376)

14,179Amounts before tax effect

(263)

(110)

(2,768)Tax effect
Deferred gain (loss) on hedges

67

25

705

(196)

(85)

(2,063)

—

354

—

450

(177)

4,737

341

(123)

3,589

(21)

(6)

(221)

320

(129)

3,368

Surplus on the revaluation of land, net of income taxes:
Tax effectTranslation adjustments:
Amounts arising during the year
Share of other comprehensive income (loss) of associates accounted forusing equity method:Amounts arising during the year
Reclassification adjustments for gains and losses included in net income
Share of other comprehensive income (loss) of associates accounted for using
equity method
Total other comprehensive income

¥

1,133

¥

1,851

$

11,926

9. Research and Development Expenses
Research and development expenses, included in selling, general and administrative expenses and cost of sales, for the years ended
March 31, 2013 and 2012 amounted to ¥2,559 million ($26,937 thousand) and ¥2,622 million, respectively.

Annual Report 2013 35

10. Leases
Leases’ accounting
Finance lease transactions that do not involve transfer of ownership
1. Leased asset quality(a) Tangible assets
		Mainly production installations (Machinery and equipment) in the machinery segment and distribution vehicles (Machinery andequipment) in the others segment(b) Intangible assets
		Mainly software
2. Depreciation method of leased assets	Refer to “(7) Property, Plant and Equipment and Depreciation” in “2. Summary of Significant Accounting Policies.” Finance leasetransactions that do not involve transfer of ownership, entered into on and before March 31, 2008, by the Company and its
domestic consolidated subsidiaries are accounted for as operating leases.
The pro forma amounts representing acquisition costs, accumulated depreciation and net carrying value for the machinery andequipment and others held under the finance leases currently accounted for as operating leases as of March 31, 2013 and 2012 wereas follows:
Thousands of
U.S. dollars

Millions of yen

2013

Acquisition costs¥

Net carrying value

¥

1,530

Accumulated depreciation
¥

2013

2012

1,954
424

2,192

$

16,105

1,473
¥

719

20,568$4,463

Lease payments relating to finance leases accounted for as operating leases amounted to ¥295 million ($3,105 thousand) and¥361 million for the years ended March 31, 2013 and 2012, respectively, which were equal to the depreciation expense of leased
assets computed by the straight-line method over the lease terms.
Future minimum lease payments including an interest element under the finance leases outstanding as of March 31, 2013 and2012 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2013

Within one year

¥
¥

36

261

¥

163

Over one year

424

2013

2012

294

$

¥

719

2,747
1,716

425
$

4,463

11. Financial Instruments
1. Overview(1) Policy for financial instruments		In consideration of annual financial plan, the Furukawa Group raises funds through mainly bank borrowings and bond issues.
Further, the Furukawa Group raises short-term capital through mainly bank borrowings. The Furukawa Group uses derivatives
for the purpose of reducing risk and does not enter into derivatives for speculative or trading purpose.
(2) Types of financial instruments and related risk		Trade receivables—trade notes and accounts receivables—are exposed to credit risk in relation to customers. In addition, theFurukawa Group is exposed to foreign currency exchange risk arising from receivables denominated in foreign currencies. In
principle, the foreign currency exchange risks deriving from the trade receivables denominated in foreign currencies are hedged
by forward foreign exchange contracts.
			 Investment securities are exposed to market risk. Those securities are composed of mainly the shares of common stock ofother companies with which the Furukawa Group has business relationships.
			 Substantially all trade payables—trade notes and accounts payables—have payment due date within one year.
			 Short-term debt is raised mainly in connection with business activities, and long-term debt is taken out principally for the
purpose of making capital investments. Long-term debt with variable interest rates is exposed to interest rate fluctuation risk.
However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Furukawa Grouputilizes rate swap transactions as a hedging instrument for each contract. The assessment of effectiveness is omitted since itmeets conditions of specific matching criteria for interest rate swap.
			 Regarding derivatives, the Furukawa Group enters into forward foreign exchange contracts to reduce the foreign currency
exchange risk arising from the receivables and payables denominated in foreign currencies. The Furukawa Group also enters into
interest rate swap transactions to reduce fluctuation risk deriving from interest payable for debt bearing interest at variable rates.
The Furukawa Group also enters into forward commodity exchange contracts to reduce fluctuation risk of commodity price of
inventories. Information regarding the method of hedge accounting, hedging instruments, hedged items, hedging policy andthe assessment of effectiveness of hedging activities is found in “(14) Hedging Activities” in “2. Summary of Significant
Accounting Policies.”(3) Risk management for financial instruments		 (a) Monitoring of credit risk (the risk that customers or counterparties may default)			In accordance with the internal policies of the Furukawa Group for managing credit risk arising from receivables, each related
division monitors credit worthiness of their main customers periodically, and monitors due dates and outstanding balancesby individual customer.
				 In utilizing derivatives, the Furukawa Group has transactions with major financial institutions or trading companies whichhave high credit to reduce credit risk.
		 (b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)			For trade receivables and payables denominated in foreign currencies, the Furukawa Group identifies the foreign currency
exchange risk for each currency on a monthly basis and principally enters into forward foreign exchange contracts to hedge
such risk. In order to mitigate the interest rate risk for loans payable and bonds bearing interest at variable rates, theFurukawa Group enters into interest rate swap transactions.
				 For investment securities, the Furukawa Group periodically reviews the fair values of such financial instruments.
				 In conducting or managing derivative transactions, each division makes transactions by approval of the directors oftransaction-related divisions.
		 (c)	Monitoring of liquidity risk (the risk that the Furukawa Group may not be able to meet its obligations on scheduled due dates)			Based on the report from each division, the Furukawa Group prepares and updates its cash flow plans on a monthly basis to
manage liquidity risk.
(4) Supplementary explanation on the estimated fair value of financial instruments		The value of financial instruments is based on their quoted market place, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in different fair value. In addition, the notional amounts of derivatives in “12.
Derivative Transactions” are not necessarily indicative of the actual market risk involved in derivative transactions.

Annual Report 2013 37

2. Estimated fair value of financial instruments
	Carrying value of financial instruments on the consolidated balance sheets as of March 31, 2013 and 2012 and estimated fair value
are shown as follows. The following table does not include financial instruments for which it is extremely difficult to determine thefair value. (Please refer to Note 2 below.)
Millions of yen

Thousands of U.S. dollars

2013

2013

Carrying value

Estimated fair value¥ 17,964¥ 17,964

Difference

Carrying value

Estimated fair value$ 189,095$ 189,095

Difference

Assets(1) Cash and cash equivalents

¥

—

$

—

(2) Trade notes and accounts receivable

23,514

23,514—

247,516

247,516—(3) Investment securities

17,535

17,535—

184,579

184,579—

59,01359,013—621,190621,190—¥ 24,532¥ 24,532—$ 258,232$ 258,232

10,738

10,738—113,032

113,032

Total assets
Liabilities(1) Trade notes and accounts payable(2) Short-term debt (*1)

¥

$

—
—

69,896

70,237341

735,747

739,337

3,589

Total liabilities

105,166

105,507341

1,107,011

1,110,601

3,589

Derivatives (*2)

¥

¥

—

$

$

(3) Long-term debt (*1)

(524)

(524)

¥

5,516

5,516

$

—

Millions of yen

2012
Carrying value

Estimated fair value

Difference

Assets(1) Cash and cash equivalents¥(2) Trade notes and accounts receivable

14,154¥29,686(3) Short-term investments and investment securities
Total assets

14,154¥—29,686—

15,067

15,067—58,90758,907—

Liabilities(1) Trade notes and accounts payable¥

26,023¥26,023¥—(2) Short-term debt (*1)

12,897

12,897—(3) Long-term debt (*1)

72,90073,255355

Total liabilities
Derivatives (*2)

111,820¥(261)

112,175
¥

(261)

355
¥

—

(*1) Current portion of long-term debt is included in long-term debt.
(*2) The value of assets and liabilities arising from derivatives is shown at net value, with the amount in parentheses representing net
liability position.
Notes:
1. Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and cash equivalents, (2) Trade notes and accounts receivable
		 Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Investment securities		The fair value of stocks is based on market prices. For information on securities classified by holding purpose, please refer to “5.
Investment Securities” to the consolidated financial statements.
Liabilities(1) Trade notes and accounts payable, (2) Short-term debt
		 Since these items are settled in a short period of time, their carrying value approximates fair value.
38

(3) Long-term debt
		The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into.
Derivative transactions
Please refer to “12. Derivative Transactions” to the consolidated financial statements.
2. Financial instruments of which it is extremely difficult to determine the fair value as of March 31, 2013 and 2012
Thousands of
U.S. dollars

Millions of yen

2013

¥

Unlisted stocks

¥

—

Bonds
¥

Total

2013

2012

7,147
7,147

8,128

$

75,232
—

1
¥

8,129

$

75,232

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are
not included in the above table of “(3) Investment securities.”
3. Redemption schedule for receivables and marketable securities with maturities after March 31, 2013 and 2012 are as follows:
For the year ended March 31, 2013
Due in one
year or lessMillions of yen

Cash deposit¥

Trade notes and accounts receivable

18,231

Due after one year
through five years

Due after five years
through ten years

¥

¥

—

—

Due after
ten years¥—

23,514

—

—

—

—

17

—

—

Investment securities
Other securities with maturity		(1) Bonds (Municipal bonds)

		(2) Bonds (Corporate bonds)

—
¥

Total

41,745

—
¥

17

—
¥

—

51
¥

51

For the year ended March 31, 2012
Due in one
year or lessMillions of yen

Cash deposit¥

Trade notes and accounts receivable

13,773Due after one year
through five years

Due after five years
through ten years

¥

¥

—

—

Due after
ten years¥—

29,686

—

—

—

—

—

18

—

Short-term investments and investment securities
Other securities with maturity(1) Bonds (Municipal bonds)(2) Bonds (Corporate bonds)
Total

47
¥

43,506

—
¥

—

—
¥

18

46
¥

46

For the year ended March 31, 2013
Thousands of U.S. dollars

Cash deposit
Trade notes and accounts receivable

Due in one
year or less$ 191,905

Due after one year
through five years

Due after five years
through ten years

$

$

—

247,516——

Due after
ten years

$

—

—
—

Investment securities
Other securities with maturity		(1) Bonds (Municipal bonds)

—

179

—

—

		

(2) Bonds (Corporate bonds)

—

—

—

537

Total

$ 439,421

$

179

$

—

$

537

4. The redemption schedule for long-term debt is disclosed in “6. Short-Term Debt, Long-Term Debt and Lease Obligations.”
Annual Report 2013 39

12. Derivative Transactions
The notional amounts and estimated fair value of the derivative instruments outstanding at March 31, 2013 and 2012 for which
hedged accounting have been applied are as follows.
1. Currency-related transactions
Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2013
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

¥

1,836
205
6,835

—
—
—

¥

(78)
(4)
7

Accounts receivable
Accounts receivable

¥

167
536

—
—

(*)
(*)

Accounts payable

¥

3,395

—

(*)

Millions of yen
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2012
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable

¥

1,075
418
7,202

—
—
—

¥

(24)
(17)
(204)

Accounts receivable
Accounts receivable

¥

590
466

—
—

(*)
(*)

Accounts payable

¥

2,523

—

(*)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Allocation method

Type of transaction

Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
		U.S. dollars
Forward foreign exchange contracts
Sell
		U.S. dollars
		EUR
Buy
		U.S. dollars

Major object of hedge

As of March 31, 2013
Contract amounts

Maturing after one year

Fair value

Accounts receivable
Accounts receivable
Accounts payable$

19,326
2,158
71,947

—
—
—

$

(821)
(42)
74

Accounts receivable
Accounts receivable

$

1,758
5,642

—
—

(*)
(*)

Accounts payable$

35,737—(*)

Note: The fair values of forward foreign exchange contracts are based on exchange rates or prices provided by financial institutions.
(*) The fair values by means of the allocation method for forward foreign exchange contracts are included in the fair values of thehedged accounts receivables and payables because the derivative transactions are treated as a part of hedged accounts receivables
and payables.
40

2. Interest-related transaction
Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2013
Contract amounts¥

34,550Maturing after one year¥

Fair value

20,108(*)

Millions of yen
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2012
Contract amounts¥

33,984

Maturing after one year¥

Fair value

27,780(*)

Thousands of U.S. dollars
Method of hedge accounting

Special accounting
procedure forinterest rate swap

Type of transaction

Receive/floating and pay/fixed

Major object of hedge

Long-term debt

As of March 31, 2013
Contract amounts$

363,684

Maturing after one year$

Fair value

211,663(*)(*) The fair values by means of the special accounting procedure for interest rate swap contracts are included in the fair values of thehedged long-term debt because the derivative transactions are treated as a part of hedged long-term debt.
3. Commodity-related transactions
Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

As of March 31, 2013
Contract amounts

Raw material
Raw material¥

Maturing after one year——

12,463—

Fair value

—
¥

(448)

Millions of yen
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

As of March 31, 2012
Contract amounts

Raw material
Raw material¥

Maturing after one year——

11,438—Fair value

—
¥

(17)

Thousands of U.S. dollars
Method of hedge accounting

Principal method

Type of transaction

Forward product contracts
Sell		Copper
Buy
		Copper

Major object of hedge

As of March 31, 2013
Contract amounts

Raw material
Raw material$

Maturing after one year——

131,189—

Fair value—$(4,716)

Note: The fair values of forward product contracts are based on the price provided by trading companies.
(*) Since short position trade is dependent on copper price at the time when copper will be received, amount of contract and the fairvalue as of March 31, 2013 and 2012 does not exist and is not disclosed.

Annual Report 2013 41

13. Employees’ Retirement Benefits
The balances of the retirement benefit obligation and plan assets, funded status and the amounts recognized in the consolidatedbalance sheets as of March 31, 2013 and 2012 are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

Retirement benefit obligation
Plan assets at fair value
Unfunded status
Unrecognized net obligation at transition
Unrecognized actuarial loss
Unrecognized prior service cost
Prepaid pension costAccrued employees’ retirement benefits

2013

2012

2013

¥ (15,373)
8,609(6,764)—
7,629
224(2,139)¥ (1,050)¥ (15,847)
8,096(7,751)
397
8,663
252
(3,255)¥ (1,694)$ (161,821)
90,621(71,200)—
80,305
2,358(22,516)$ (11,053)

The components of retirement benefit expenses for the years ended March 31, 2013 and 2012 were as follows:
Thousands of
U.S. dollars

Millions of yen

2013

Service cost
Interest cost
Expected return on plan assets
Amortization of net retirement benefit obligation at transition
Amortization of actuarial loss
Amortization of prior service cost
Retirement benefit expenses
Employees’ contributions to the defined benefit pension plans
Total

¥

¥

2013

2012

780
309
(111)
28
1,119
132
2,257
8
2,265

¥

¥

713
339
(95)
28
1,001
132
2,118
3
2,121

$

$

8,211
3,253
(1,168)295
11,778
1,389
23,75884
23,842

The assumptions used in accounting for the above plans were as follows:
2013

2012

Discount rates

mainly 1.6%

mainly 1.8%

Expected return on plan assets

mainly 2.0%

mainly 2.0%

14. Income Taxes
The reconciliation for the year ended March 31, 2013 was summarized as follows:
Statutory tax rate
Non-deductible expenses for tax purposes
Non-taxable dividends and other income
Inhabitants per capital tax
Equity in earnings and losses of affiliates
Amortization of goodwill and negative goodwill
Gain on sales of subsidiaries’ stocks
Changes in valuation allowance
Tax deduction such as R&D expenses
Different tax rates applied to subsidiaries
Other
Effective tax rate

42

38.0%
0.8
(0.3)
1.8
2.3
1.2
(5.1)
9.4
(1.8)
(4.6)
0.2
41.9%

The reconciliation between the effective tax rate reflected in the consolidated statements of operations and the statutory tax rate
for the year ended March 31, 2012 was omitted as the Company recorded loss before income taxes and minority interests.
Deferred tax assets and liabilities as of March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2013

Deferred tax assets:
Accrued employees’ retirement benefits
Impairment loss on property, plant and equipment
Investment securities
Net operating loss carryforwards
Land
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Statutory reserves provided for tax purposes
Gain from establishment of trust for retirement benefit plans
Land
Unrealized holding gain (loss) on securities
Capitalized interest of a foreign subsidiary
Other
Total deferred tax liabilities
Net deferred tax liabilities
Deferred tax liabilities on surplus on the revaluation of land

¥

2013

2012

5,829
2,426
3,317
14,106
2,175
1,372
29,225(21,069)
8,156(1,117)(3,729)(8,158)(1,079)(777)(197)(15,057)¥ (6,901)¥ (2,346)

¥

5,660
2,772
3,837
15,8872,198
1,193
31,547(21,437)
10,110(1,294)(3,790)(9,172)(108)(1,834)(19)(16,217)¥ (6,107)¥ (2,370)$

61,35825,537
34,916
148,484
22,895
14,442
307,632(221,779)
85,853(11,758)(39,253)(85,874)(11,358)(8,179)(2,073)(158,495)$ (72,642)$ (24,695)

15. Contingent Liabilities
Contingent liabilities as of March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2013

Notes receivable discounted and endorsed
Loans guaranteed

¥

456
2,713

2013

2012

¥

1,812
2,870

$

4,800
28,558

16. Write-Down of Inventories
The amounts of write-down of inventories, included in cost of sales for the year ended March 31, 2013, amounted to ¥46 million($484 thousand). For the year ended March 31, 2012, the Company reversed write-down in the amount of ¥51 million and credited
it to cost of sales.

Annual Report 2013 43

17. Other Income (Expenses)—Other, Net
Other income (expenses)—other, net for the years ended March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2013

Gain on foreign exchange
Gain on sales of disused articles
Gain on sales of investment securities
Compensation income
Gain on sales of subsidiaries’ stocks
Gain on change in equity
Payments for idle mines
Loss on sales and retirement of noncurrent assets
Impairment loss
Write-down of investment securities
Loss on sales of investment securities
Other, net

¥

¥

966
262
994
1,264
824
—
(541)
(63)
(331)
(3)
—
(80)
3,292

2013

2012

¥

¥

160
144
3
632
—
79
(581)
(136)
(101)
(3,267)(1,027)(199)(4,293)$$

10,1682,758
10,463
13,305
8,674—(5,695)(663)(3,484)
(32)
—
(841)
34,65318. Segment Information
The reportable segments are constituent units of the Furukawa Group for which separate financial information is available. The Boardof Directors periodically examines these segments for the purpose of deciding the allocations of management resources and evaluating
operating performance.
The Company mainly manufactures and sells machinery, smelts on consignment and sells copper and manufactures and sells
electronic materials and chemicals.
Under the holdings company structure, each main Group company plans domestic and overseas comprehensive strategies about
their products, and the Company manages and supervises them.
The Furukawa Group therefore categorizes segments classified by products based on main Group companies. The nine reportablesegments are as follows: Industrial Machinery, Construction and Mining Machinery (Rock Drills), UNIC Machinery, Metals, Electronic
Materials, Chemicals, Paints, Real Estate and Fuels.
Main products and services belonging to each segment are as follows:(a) Industrial Machinery
		 Manufacture and sale environmental machinery, pumps, plants, stone crushers, steel bridges and castings(b) Construction and Mining Machinery (Rock Drills)
		 Manufacture and sale rock drills such as breakers, crushers, crawler drills and tunnel drill jumbos(c) UNIC Machinery
		 Manufacture and sale truck-mounted cranes (UNIC cranes) and vehicle carriers (UNIC carriers)(d) Metals
		After buying ore, sale electrolytic copper, gold, silver and sulfuric acid which is smelted on consignment by joint smelting
company(e) Electronic Materials
		Manufacture and sale high-purity metallic arsenic, gallium phosphide polycrystals, cores and coils, and aluminum nitride
ceramics, optical components(f) Chemicals
		 Manufacture and sale cuprous oxide, ferric polysulfate solution, sulfuric acid, titanium dioxide and functional materials(g) Paints
		 Manufacture and sale paints, acrylic rubber and glue(h) Real Estate		 Lease real estate(i) Fuels
		 Purchase and sale perineum such as heavy oil, light oil and gasoline44In addition, the Company withdrew from the fuels business by transferring all the shares of Furukawa Commerce Co., Ltd., which
previously composed the Fuels segment, to Usami Koyu Corp., on October 1, 2012.
Additionally, the Company withdrew from the paints business with the completion of the takeover bid of Tohpe Corporation,
which previously composed the Paints segment, by transferring all its shares to Zeon Corporation, on March 27, 2013.
The accounting method used for reportable segments is the same as the method stated in “2. Summary of Significant Accounting
Policies.” Operating income (loss) of reportable segments is based on operating income in the consolidated statements of operations.
Intersegment sales and transfers are recorded based on the actual market prices.
Segment information of the Furukawa Group for the years ended March 31, 2013 and 2012 was as follows:Year ended March 31, 2013

Millions of yen

Industrial
MachinerySales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Construction
and Mining
Machinery(Rock Drills)

Electronic
Materials

Chemicals

5,094
896
5,990
304

¥ 17,606 ¥ 28,294 ¥ 18,750 ¥ 27,951 ¥ 7,346 ¥ 16,118
327
634
466
249
286
223
—
(0)
19
—
—
—
—
—
25
3,785
628
—
173
424
164
208
228
117
Millions of yen
PaintsReal Estate

Fuels

OthersAdjustments

Consolidated¥ 15,079 ¥ 1,059 ¥ 3,771 ¥752 ¥— ¥165,540
53
142
164
1,374
(5,512)—
15,132
1,201
3,935
2,126
(5,512) 165,540
¥
66 ¥
220 ¥
(28) ¥(63) ¥(80) ¥ 3,363¥— ¥ 25,078 ¥
316
198
154
—
—
—
212
855

Year ended March 31, 2012— ¥ 3,729 ¥ 41,204 ¥186,076
3
87
2
2,791
—
—
—
173
—
321
—
4,759
1
27
49
2,458
Millions of yen

Industrial
MachinerySales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Metals¥ 12,895 ¥ 23,306 ¥ 20,651 ¥ 77,945 ¥ 4,988 ¥
2,295
26
103
451
8
15,19023,332
20,75478,396
4,996
¥
779 ¥
(68) ¥ 2,213 ¥283 ¥ (263) ¥Year ended March 31, 2013

Sales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

UNIC
Machinery

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

MetalsElectronic
Materials¥ 12,949 ¥ 24,144 ¥ 16,106 ¥ 68,114 ¥ 4,616 ¥
1,828
31
75
515
7
14,777
24,175
16,181
68,629
4,623
¥
708 ¥
334 ¥
928 ¥
308 ¥ (234) ¥Chemicals

5,187
878
6,065
251

¥ 19,707 ¥ 26,056 ¥ 16,982 ¥ 26,667 ¥ 7,443 ¥ 16,244
392
684
470
311
306
272
—
—
110
—
—
—
—
—
4
3,781
674
—
170
158
204
225
69
264
Annual Report 2013 45

Year ended March 31, 2012

Millions of yen
PaintsSales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Real Estate

Fuels

Consolidated¥ 14,931 ¥ 24,462 ¥ 2,027 ¥ 3,697 ¥ 35,755 ¥193,971
298
219
9
83
(5)
3,039
1,866
—
—
—
—
1,976
177
—
—
374
—
5,010
217
1,428
20
7
266
3,028
Thousands of U.S. dollars

Industrial
Machinery

Construction
and Mining
Machinery(Rock Drills)

UNIC
Machinery

MetalsElectronic
Materials

Chemicals$ 135,737 $ 245,326 $ 217,379 $ 820,474 $ 52,505 $ 53,621
24,158
274
1,084
4,747
84
9,432
159,895 245,600 218,463 825,221
52,58963,053$ 8,200 $(716) $ 23,295 $ 2,979 $ (2,768) $ 3,200$ 185,326 $ 297,832 $ 197,369 $ 294,221 $ 77,326 $ 169,663
3,442
6,674
4,905
2,621
3,011
2,347
—
(0)
200
—
—
—
—
—
263
39,842
6,611
—
1,821
4,463
1,726
2,189
2,400
1,232

Year ended March 31, 2013

Thousands of U.S. dollars
PaintsSales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

Adjustments¥ 14,874 ¥ 1,233 ¥ 9,576 ¥767 ¥— ¥157,566
46
135
344
1,357
(5,216)—
14,920
1,368
9,920
2,124
(5,216) 157,566¥ (329) ¥357 ¥(14) ¥(94) ¥(60) ¥ 2,155

Year ended March 31, 2013

Sales and operating income (loss)
Outside customers
Intersegment
Total
Operating income (loss)
OthersSegment assets
Depreciation
Amortization of goodwill and negative goodwill
Investments in equity-method affiliates
Increase in tangible fixed assets and intangible fixed assets

OthersReal Estate

Fuels

OthersAdjustments

Consolidated$158,726 $ 11,147 $ 39,695 $ 7,916 $— $ 1,742,526
558
1,495
1,726
14,463(58,021)—
159,284
12,642
41,421
22,379(58,021) 1,742,526$
695 $ 2,316 $ (295) $ (663) $ (843) $ 35,400$— $263,979 $
3,326
2,084
1,621
—
—
—
2,232
9,000

— $ 39,253 $433,726 $ 1,958,695
32
916
21
29,379
—
—
—
1,821
—
3,379
—
50,09511284
516
25,874(Related information)
Years ended March 31, 2013 and 2012
1. Information regarding products and services
Year ended March 31, 2013

Millions of yen
CopperSales for outside customers¥

64,364

Others¥Year ended March 31, 2012¥

55,397

Year ended March 31, 201346

165,540¥

157,566

Others¥102,169

Total

Thousands of U.S. dollars
CopperSales for outside customers¥

Millions of yen
CopperSales for outside customers

101,176

Total$

677,516

OthersTotal$ 1,065,010$1,742,526

2. Geographic segment information(1) Net sales
Year ended March 31, 2013
Millions of yen
Japan

¥

Asia

133,151¥

Others20,800¥Total

11,589¥165,540¥

157,566

Year ended March 31, 2012
Millions of yen
Japan

¥

Asia

123,461¥

Others23,078¥

Total

11,027

Year ended March 31, 2013
Thousands of U.S. dollars
Japan

Asia

$ 1,401,589$

Others

218,947$

Total

121,990$ 1,742,526(2) Property, plant and equipment
The geographic segment information for the years ended March 31, 2013 and 2012 has not been presented, because the total assets
in Japan exceed 90% of consolidated totals.
3. Information regarding main customers
Year ended March 31, 2013
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥23,860

MetalsYear ended March 31, 2012
Millions of yen
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

¥17,209

MetalsYear ended March 31, 2013
Thousands of U.S. dollars
Name of customer

Sales volume

Related segment

Furukawa Electric Co., Ltd.

$251,158

Metals

4. Impairment loss on property, plant and equipment
Millions of yen

Year ended March 31, 2013

Impairment loss onproperty, plant andequipment

Construction
and Mining
Machinery
UNIC
Industrial
Machinery (Rock Drills) Machinery

—

—

—

MetalsElectronic
Materials

Chemicals———

PaintsReal Estate

Fuels

Others

— ¥

52 ¥

170 ¥

— ¥

13 ¥

1

Adjustments Consolidated

109

— ¥

331

— ¥

87 ¥

101

Year ended March 31, 2012
Millions of yen

Impairment loss onproperty, plant andequipment

—

—

—

—

—

—

Year ended March 31, 2013
Thousands of U.S. dollars

Impairment loss onproperty, plant andequipment

—

—

—

—

—

—

— $

547 $1,790 $1,147— $3,484

Annual Report 2013 47

5. Amortization of goodwill and unamortized goodwill in reporting segments
Millions of yen

Year ended March 31, 2013

Balance as of March
31, 2013

Construction
and Mining
Machinery
UNIC
Industrial
Machinery (Rock Drills) Machinery—

MetalsElectronic
Materials——— ¥65

Year ended March 31, 2012

Balance as of March
31, 2012

Paints—Real Estate

Fuels

OthersAdjustments Consolidated

—

—

—

—

— ¥65— ¥ 418———— ¥ 437———— $684

Millions of yen

—

— ¥

19

—

—

Year ended March 31, 2013

Balance as of March
31, 2013

Chemicals

Thousands of U.S. dollars—— $684

—

—

—

—

6. Gain on negative goodwill in reporting segments
Not applicable.
19. Investment and Rental Properties
The Company and certain consolidated subsidiaries own office buildings for lease mainly in Tokyo and other areas. For the year ended
March 31, 2013, rental income was ¥383 million ($4,032 thousand), gain on sales of rental properties was ¥6 million ($63 thousand),loss on disposal was ¥40 million ($421 thousand) and impairment loss on rental properties was ¥164 million ($1,726 thousand).
For the year ended March 31, 2012, rental income was ¥565 million, loss on disposal and sales of rental properties were ¥96
million and impairment loss on rental properties was ¥101 million.
The carrying value, net changes in the carrying value and the fair value of those properties as of and for the years ended March 31,
2013 and 2012 are as follows:Year ended March 31, 2013

Carrying value
As of March 31, 2012

Net change

Fair value
As of March 31, 2013

As of March 31, 2013

Millions of yen¥

28,618

¥

(539)

¥

28,079¥27,262

Year ended March 31, 2012

Carrying value
As of March 31, 2011

Net change

Fair value
As of March 31, 2012

As of March 31, 2012

Millions of yen¥

29,180

¥

(562)

¥

28,618¥28,530Year ended March 31, 2013

Carrying value
As of March 31, 2012

Net change

Fair value
As of March 31, 2013

As of March 31, 2013

Thousands of U.S. dollars$

301,242$(5,674)$

295,568$

286,968

Notes:
1. The carrying value represents the acquisition cost less accumulated depreciation and cumulative impairment loss.
2.	Net change in carrying value for the year ended March 31, 2013 mainly consists of increases related to a decrease in the p­ ropertyof the consolidated subsidiary having been excluded from the consolidated balance sheet along with the sales of consolidated
subsidiaries’ stocks in the amount of ¥232 million ($2,442 thousand), amortization in the amount of ¥178 million ($1,874­thousand) and impairment loss on rental properties in the amount of ¥164 million ($1,726 thousand). Net change in c­ arrying
value for the year ended March 31, 2012 mainly consists of increases related to repair of buildings in the amount of ¥158 million
and decreases mainly due to sales of real estate in the amount of ¥240, amortization in the amount of ¥204 million and decrease
in rental area in the amount of ¥168 million.
3. The fair value is mainly estimated in accordance with appraisal standards for valuing real estate.
48

20. Subsequent Event
The following appropriations of retained earnings of the Company, which have not been reflected in the accompanying consolidated
financial statements, were approved at a shareholders’ meeting held on June 27, 2013:
Millions of yen

Year-end cash dividends (¥2.00 = $0.021 per share)¥

Transfer to legal reserve809

Thousands of U.S. dollars

$

8,516

$

9,369

81
¥

890

853

Annual Report 2013 49

50

Annual Report 2013 51

Corporate Data
(As of March 31, 2013)● Directors and Auditors

Company Name:

Furukawa Co., Ltd.

(As of June 27, 2013)

Head Office:Tel:

2-3,Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8370, Japan+81-3-3212-6570 Fax: +81-3-3212-6578

Date of Foundation:

August 1875

Chairman and Representative Director

Nobuyoshi Soma

President and Representative Director

Naohisa Miyakawa

Senior Managing Director

Manabu Zama

Date of Establishment:

April 1918

Managing Director

Susumu Nakamura

Number of Shares Authorized:

800,000,000 shares

Managing Director

Toshio Matsumoto

Outside Director

Masao Yoshida

Securities Code Number:

5715

Director

Akinori Ota

Employees: Consolidated

2,342

Director

Minoru Iwata

Stock Transfer Agent:

Statutory Auditor

Yoshihito Emoto

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, Japan

Statutory Auditor

Masaya Kouzaki

Outside Company Auditor

Tamiki Ishihara

Outside Company Auditor

Nobuyuki Tomotsune

Outside Company Auditor

Ryoji Hatsuse● Executive Officers(As of June 27, 2013)
Senior Managing Executive Officer

Manabu Zama

Managing Executive Officer

Susumu Nakamura

Managing Executive Officer

Toshio Matsumoto

Senior Executive Officer

Akinori Ota

Senior Executive Officer

Minoru Iwata

Senior Executive Officer

Kenji Ichimura

Senior Executive Officer

Osamu Watanabe

Senior Executive Officer

Saburou Saruhashi

Executive Officer

Yasufumi Watanabe

Executive Officer

Shigeo Matsudo

Executive Officer

Kiyohito Mitsumura

Executive Officer

Naoki Kato

Executive Officer

Kiyohiko Ikebe

Executive Officer

Yoshinari Kuno

Number of Shares Outstanding:

404,455,680 shares

Stock Exchange Listing:Tokyo

Principal Shareholders
Number of
Shares(Thousands)

Percentage ofTotal Shares(%)

Asahi Mutual Life Insurance Co.

27,923

6.90

Seiwa Sogo Tatemono Co., Ltd.

15,034

3.71

The Master Trust Bank of Japan, Ltd. (trust account)

14,6003.60

Sompo Japan Insurance Inc.

12,429

3.07

Japan Trustee Services Bank, Ltd. (trust account)

11,961

2.95

Chuo Real Estate Co., Ltd.

9,712

2.40

Fujitsu Limited

9,617

2.37

Furukawa Electric Co., Ltd.

8,777

2.17

Fuji Electric Co., Ltd.

8,620

2.13

The Yokohama Rubber Company, Limited

8,510

2.10

Composition of Shareholders

Forward-Looking Statements
This annual report contains statements about the Company’s plans, strategies, performance outlooks, and the like, and includesforward-looking statements that are not historical facts. Suchstatements reflect expectations, estimates, forecasts, projections, and plans based on information
currently available to the Company and are subject to various risks, uncertainties, and assumptions.
These changing factors may cause actual results to differ materially from those projected.

URL: http://www.furukawakk.co.jp/
52

Foreign Institutions
8.66%
Other JapaneseCompanies
23.28%

Financial Instruments Firms(Securities Companies)

3.07%

Financial Institutions

27.77%

Individuals
and Others

37.22%

Corporate History

1875

Began the operation of the Kusakura Copper Mine in Niigata(Company foundation).

1877

Began the operation of the
Ashio Copper Mine in Tochigi.

1900

Set up a machinery works at the
Ashio Copper Mine and enteredinto the machinery business.

1914

Manufactured the first rock drillin Japan.

1918

Spun off mining business from
Furukawa General Partnershipand established Furukawa Mining Co., Ltd.

1944

1951
1962

The first domestic rock
drill was developed at
Ashio.

Established a manufacturer of
UNIC products / components,
Furukawa UNIC (Thailand) Co.,
Ltd., in Thailand.

1998

Established a sales company ofrock drill products, Furukawa Rock
Drill Europe B.V., in Holland.

2003

Established Taian Furukawa
Machinery Co., Ltd.—a jointcompany for the manufacturing
and distribution of UNIC cranes in
China.

2005

Spun off the Machinery business,
Metals business, and Electronic
Materials and Chemicals businessand shifted to a group management structure as the Furukawa
Company Group to enhance
management.

2006

Established a rock drills sales
company, Furukawa Rock Drill(Shanghai) Co., Ltd., in China.

2007

Formed a capital and businessalliance for the GaN semiconductor epi-wafer business with
POWDEC K.K.

2008

Set up the Nitride Semiconductors Department as a GaN andrelated nitride semiconductorrelated research organization.

Bought Osaka Smelter of Toa
Chemical Smelting Co., Ltd., andestablished it as Osaka Cementation and Refining. Entered into
the chemical business.
Built the Oyama Works of theMachinery Division of the Ashio
Copper Mine in Tochigi.

1950

The Ashio Copper Mineis where the Furukawa
Company Group began.

1997

At the Oyama Works, pumps
and mining machinery forcopper mines were manufactured, not only for internal
use but also to sell externally.

Built the Takasaki Works of theRock Drill Division in Gunma.

Began manufacturing oftitanium dioxide and cuprous
oxide at Osaka Cementation
and Refining.

At the Takasaki Works, rock
drills were mass produced,
and we established the position of a leading rock drill
manufacturer.

Completed the Furukawa /Outokumpu flash smelting plant
at Ashio Smelting and Refining.

2009
The Furukawa / Outkumpu
flash smelting plant.

Completed research anddevelopment of high-purity(99.999%) metallic arsenic andcommenced with the sale of it.

1987

Bought UNIC Corporation(manufacturer of truck-mounted
cranes).

1989

The Japanese name changed
from Furukawa Kogyo Kabushiki Kaisha to Furukawa Kikai
Kinzoku Kabushiki Kaisha.

1990

Bought an American breaker sales
and manufacturing company.

Arsenic is one of the byproducts generated during
the smelting stage of copper
concentrates.

“UNIC” has become asynonym for truck-mounted cranes in Japan.

Built the laboratory of the Nitride
Semiconductors Department inOyama.

This is an affiliate company for
the UNIC business establishedin Rayong, Thailand, which
manufactures truck-mounted
cranes and other products.

This is an affiliate company forthe construction and mining
machinery business establishedin Utrecht, Holland, which
distributes rock drills and otherproducts.

This is an affiliatecompany for the UNIC
business established in
Taian, Shandong, China,
which manufactures anddistributes truck-mounted
cranes and other products.

This is an affiliate company which deals with theconstruction and mining
machinery business established in Shanghai, China,
and distributes rock drills
and other products.

Made Tohpe Corporation, which
manufactures and distributes
paints and chemicals, into a consolidated subsidiary.

2011

Established a sales company ofrock drill products, Furukawa Rock
Drill India Pvt. Ltd., in India.

2012

Established a sales company ofrock drill products, Furukawa
Rock Drill Latin America S.A., in
Panama.

In 2009, the laboratory of
the Nitride Semiconductors Department was built
in Oyama.

With the sale of all of its shares inFurukawa Commerce Co., Ltd.,the Group has withdrawn fromthe fuels business.

2013

The Group exited the paints business with the sale of all of its sharesin Tohpe Corporation in 2013.

Annual Report 2013 53

2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8370, Japan